Tullow shares decline despite upbeat trading statement

OIL producer and explorer Tullow expects to report revenue of $900m (€776.7m) for the first half of its financial year and a $500m (€431.5m) gross profit, it confirmed in an upbeat trading statement.

Chief executive Paul McDade said the company has “performed strongly” so far in 2018.

It has further cut its debt pile, which it expects to be at $3.2bn (€2.7bn) at the end of this month. That will give it a debt to earnings ratio – or gearing – of about 2.1 times.

The company, which is primarily engaged in production and exploration in Africa, also edged its full-year production forecast higher. It said its firsthalf oil production at its west Africa assets is expected to average 87,400 barrels of oil a day, in line with expectations.

But it said it now expects its total full-year working interest oil production to between

86,000 and 92,000 barrels a day, up from a previously guided range of between 82,000 and

90,000. “With substantially reduced gearing and financial discipline embedded across the group, we are now able to focus on the growth of the business,” said Mr McDade.

“We are accelerating pro- duction and cash-flow growth across west Africa, we continue to make good progress towards sanctioning our developments in east Africa and, having refreshed the exploration portfolio, we are about to embark on a multi-year frontier drilling campaign targeting high-impact prospects in Africa and South America,” he added. Tullow said its 2018 capital expenditure guidance remains unchanged at $460m (€397m).

Davy Stockbrokers said Tullow has made “significant progress in reducing financial risk over the last two years”. Tullow’s shares fell as much as 6pc yesterday.