Tullow Shares Plummet 70% After Group Cuts Production Outlook

Oil & Gas
Proshare - Facebook Proshare - Twitter Proshare - Linked In Proshare - WhatsApp

Tuesday, December 10, 2019 / 08:05 AM / by  David Sheppard and Myles McCormick of Financial Times / Header Image Credit: OilPrice


  • Chief executive and head of exploration leave FTSE 250 oil and gas explorer


Shares in Tullow Oil plunged more than 70 per cent after the FTSE 250 oil and gas explorer slashed its production outlook and announced the departure of its chief executive and head of exploration.


The decline knocked more than 1.4bn pounds off the oil group's market capitalisation and sent its stock to its lowest level since the end of 2000.


Tullow, which was founded in the 1980s to focus on frontier markets of the oil industry primarily in Africa, was worth as much as 14.5bn pounds in 2012. It had been a favourite of UK investors and rode the boom in oil prices for more than a decade, with its shares rising by an average of almost 30 per cent a year between 2000 and 2012.


But it has stumbled in recent years as the era of $100-a-barrel crude oil came to an end with the rise of the US shale industry. The shares, which had already declined sharply from the company's 2012 peak, closed down nearly 72 per cent on Monday, valuing Tullow at 562m pounds.


Analysts and investors queried whether company executives had talked up Tullow's prospects too aggressively as it sought to recover from the oil slump, wrongfooting those drawn to one of the few UK explorers still pursuing rapid growth.


Tullow said it expected production to be almost a third lower than it had forecast at the start of the year and also suspended its dividend. Paul McDade, chief executive and Angus McCoss, head of exploration, have left the group.


Dorothy Thompson, the former Drax boss and non-executive chair of Tullow, who has been appointed temporary executive chair, conceded there had been "material errors made in projecting forward production at Tullow", saying the company had "done a lot of work in the last few weeks to make sure these errors are not repeated".


She also sought to play down fears about the need for an immediate rights issue. "That is not something on our current agenda at all," she said, but did not deny the company could be sold for the right price.


Last month, shares in Tullow fell to a two-year low after it said two significant discoveries in waters off Guyana contained heavy oil, prompting warnings that the projects would be difficult to commercialise.


The company now expects to generate just $150m of annual free cash, down from $500m previously, despite also cutting its plans for capital expenditure.


Proshare Nigeria Pvt. Ltd.


Henry Steel at London-based hedge fund Odey Asset Management, which has been betting against the company's shares, said the "disaster" of the Guyana exploration update had already led to questions from investors about how Tullow could have talked up the finds without referring to the quality of the oil.


"Management had lost operating and exploration credibility," Mr Steel said. "This is why the board has acted so decisively, finally."


Analysts at Stifel said investors' biggest immediate concern would be the strength of the balance sheet given the increased risk of a potential equity issuance to reduce debt because of the lower projected free cash flow.



The post Tullow Shares Plummet 70% After Group Cuts Production Outlook first appeared in Financial Times on December 09, 2019


Proshare Nigeria Pvt. Ltd.

Related to Tullow Oil

  1. Tullow Shares Plummet 70% After Group Cuts Production Outlook
  2. Tullow, UK uncovers oil in Ghana


Proshare Nigeria Pvt. Ltd.

Related News on Global Markets

  1. Nigeria and South Africa: A Reason to Worry?
  2. Global Banks Start to Embrace ESG In Their Risk Management
  3. No More Half-Measures on Corporate Taxes - Confronting a Broken System
  4. Escaping Japanification Difficult for Eurozone If It Takes Root
  5. Monetary Policy Decisions: Four SSA Countries At The Center-Stage
  6. Aramco IPO Funds May Help Offset Fresh Saudi Austerity Push
  7. Central Bank Accountability, Independence, and Transparency
  8. South Africa's Rate Decision: Giving Priority To Foreign Investors
  9. Four Collision Courses for the Global Economy - Nouriel Roubini
  10. For Venezuela's Neighbors, Mass Migration Brings Economic Costs and Benefits
  11. Election Pledges Heighten UK Fiscal Risks
  12. A Look into Ghana's 2020 Budget Numbers


Proshare Nigeria Pvt. Ltd.

Related News on Oil and Gas

  1. Oil Jumps On Saudi Surprise - OIR 061219
  2. How Much Crude Oil Do You Unknowingly Eat?
  3. Oil Markets Remain Hopeful Of OPEC Cuts - OIR 031219
  4. Oil Inches Higher As OPEC Optimism Returns To Markets - OIR 261119
  5. IMO 2020 Fuel Sulphur Regulation Comes Into Effect From Jan 01, 2020
  6. Oil Bounces Back On New Round Of OPEC Rumors - OIR 220919
  7. The Worst Is Over For Oil Markets
  8. Oil Sinks As Sentiment Turns Sour - OIR 190919
  9. Average Prices Of PMS, AGO, HHK and Cooking Gas - October 2019
  10. Five (5) Steps To Subscribing To Saudi Aramco Initial Public Offer; Sets A Valuation of $1.7trn
  11. Why Isn't Winter Pushing LNG Prices Higher?

Proshare Nigeria Pvt. Ltd.
Related News