Tullow Oil leads FTSE down as it posts $2bn loss
IRISH oil firm Tullow was the worst performer in the FTSE 100 yesterday, with shares tumbling by 7.17 per cent after the company revealed it has suspended its dividend following a “difficult” 2014.
The firm swung to a $2bn (£1.3bn) loss, its first in 15 years, from a profit of $313m in 2013, due in large part to an exploration write-off of $1.7bn. Meanwhile, sales revenue dropped by 16 per cent from $2.65bn to $2.13bn.
Aidan Heavey, Tullow chief executive, said yesterday that in response to what was “a difficult year for our industry and a challenging one for Tullow”, as well as the fall in oil price, the business has been reset.
Tullow will focus capital expenditure on high-quality, low-cost oil production in west Africa, and has “increased and diversified” its sources of debt capital, on top of reducing exploration expenditure, implementing cost saving initiatives and suspending the dividend. Heavey said: “These measures will provide us with substantial headroom and liquidity to deliver on our strategy.”
He also stated that the company’s Tweneboa-Enyenra-Ntomme (TEN) project in Ghana “remains on track”, and said it will increase Tullow’s net west Africa oil production to over 100,000 barrels of oil per day by the end of 2016, “generating substantial cash flows and placing Tullow in a strong position when the sector recovers”.