Business News of Tuesday, 10 December 2019
Source: www.citibusinessnews.com
2019-12-10
The company’s recent challenges which led to failure to meet production targets
The Head of Corporate Affairs at Tullow Oil Plc, George Cazenove, says although the oil firm has faced some challenges in recent times with its Ghana operations, the company is not actively looking for buyers.
“We are a listed company, people have shares in our company and so we are always open to offers and that is the fact of life. But we are not actively trying to sell the business,” he told Citi Business News in an interview on Monday.
The company’s recent challenges which led to failure to meet production targets in both the Jubilee and TEN fields operations culminated in the departure of Chief Executive Paul Mcdade, who has been that position since 2017 and subsequently Head of Exploration, Angus McCoss.
Given Tullow Oil’s position as one of the foremost oil companies in the country, the change in leadership signals the dawn of a new beginning which could have a potential impact on jobs as the company, among other things, look to cost rationalization measures to remain profitable.
Executive Chairman of the company, Dorothy Thompson, earlier hinted that Tullow, which is listed on the London Stock Exchange, is open to buyers and would consider any offer at the “proper value”.
But in his interview with Citi Business News, the company’s Head of Corporate Affairs explained that: “As a listed company; If someone makes an offer to the company we have to listen to it. It is a sort of a working answer you would expect the company to give. If someone makes an offer that is above our current share price then we are obliged to listen to it but it is not to say that we will accept it.”
Shares react
The Shares of Tullow Oil Plc on the London Stock Exchange plummeted by more than 50 percent as news of CEO, Paul Mcdade’s resignation over disappointing performance in its Ghana operations was announced.
Tullow Oil which is the lead partner of the Jubilee and TEN fields could not meet its production targets due to technical problems at Jubilee as well as a delay in the completion of a well at the TEN fields.
Tullow has faced challenges in recent months to its plans to develop oil fields in Uganda and Guyana.
Owing to its challenges, the company announced a revision to its key production figures stating that oil production is expected to hover around 87,000 barrels of oil per day (bopd) this year, while lower production in 2020 of between 70,000 and 80,000 (bopd), as it undertook a review of its production performance issues.
The Africa-focused oil firm also suspended its dividend as it aimed to generate more cash to support future investment plans and current explorations.
Impact on Ghana
Petroleum Economist Dr. Theo Acheampomg told Citi Business News the company’s challenges would mean the country would get slightly lower revenue from oil production as compared to what the company was forecasting.
“It means that the company will embark on some potential cost rationalization to reduce the cost base. It means again that people may end up incurring some debts in Ghana and some of the exciting contracts also will eventually have to go.
“For those shares or those who have shares in Tullow, which is listed in Ghana, remember Tullow is listed both in Ghana and London. There will be a correlation between the performance and company shares listed on the London Stock Exchange and that of the Ghana Stock exchange,” he explained.
