[Bloomberg] Tullow Oil Plc’s chief executive officer and exploration director quit after the company cut its production outlook and suspended the dividend, sending shares tumbling more than 60%.
CEO Paul McDade and exploration chief Angus McCoss resigned with immediate effect, marking the exit of Tullow’s old guard after founder Aidan Heavey departed last year. Both had been stalwarts at the company for over a decade, presiding over discoveries from West Africa to Guyana, but also a slew of recent operational setbacks.
“Whilst financial performance has been solid, production performance has been significantly below expectations from the group’s main producing assets, the TEN and Jubilee fields in Ghana,” London-based Tullow said Monday. Group output next year is forecast at 70,000 to 80,000 barrels a day — down from the 87,000 a day expected for this year — and production for the following three years will hover around the bottom of that range.
“This is likely to have a negative impact on the valuations of Tullow’s key assets,” Al Stanton, an analyst at RBC Europe Ltd., said in a note. “We expect the pace of exploration activity, and therefore news flow, to be reined in.”
The executive departures come after a year of disappointments at Tullow, where technical difficulties have hampered output in Ghana, projects in Uganda and Kenya have faced delays, and results from wells in Guyana missed expectations. The company reduced its 2019 production forecast several times as the glitches in Ghana dragged on.
The shares sank 61% to 55.28 pence as of 11:54 a.m. London time, the biggest decline since they started trading in the city 30 years ago. The stock has dropped more than 90% since 2012. Tullow’s dollar notes due 2025 declined the most since they were issued in March 2018.
“There is a risk that the market will lose sight of the true value of our underlying assets,” interim Chairman Dorothy Thompson said by phone, insisting that the Jubilee development and Uganda reserves remain world-class oil fields. The company is conducting a review “to create a sustainable business, which we believe we can do,” she said.
Thompson declined to comment on whether Tullow is actively seeking buyers, but reiterated the standard position that the company would always be open to any offers that were attractive to shareholders.
Read more: https://www.bloomberg.com/news/articles/2019-12-09/tullow-ceo-quits-amid-poor-production-dividend-suspended