TULLOW OIL IN CRISIS
Share price plunges 72pc ++ Chief executive quits ++ Production targets are cut ++ Dividend axed
THOUSANDS of Tullow oil’s small investors were reeling yesterday as the group lost almost three quarters of its value.
The company’s shares plunged nearly 72pc – wiping £1.4bn off its market capitalisation – after it slashed production forecasts, scrapped its dividend and ousted its chief executive.
on a tumultuous day, the former stock market darling also quietly hoisted up the ‘for sale’ sign as it revealed during a conference call with City analysts that it was open to receiving takeover offers at a good value.
The plunge, which dragged the share price down 71.8pc, or 101.46p, to 39.94p, was a stinging blow for Tullow’s thousands of retail investors, who hold around 15pc of the company. The oil and gas explorer’s value has crashed almost 78pc so far this year, meaning someone who had invested £1,000 on December 31 would have just £223 now. And it is 97pc lower than its 1000p peak in 2012. Someone who invested £1,000 then would have less than £30 now.
AJ Bell’s chief investment officer Russ Mould said: ‘You know an update is bad when it is accompanied by the immediate departure of senior management – and this production downgrade is a real disaster.’
Tullow triggered a wave of panic selling as it said problems at its flagship oil and gas fields in Ghana would hit the whole group’s performance in the coming years.
It was the fourth time this year the FTSE 250 energy firm had lowered guidance, and came less than four weeks since the last downgrade to its outlook.
The board sacked chief executive Paul McDade ( pictured) and exploration boss Angus McCoss with immediate effect. Chairman and former Drax boss Dorothy Thompson is temporarily stepping into the lead role.
Finance boss Les Wood will keep his position and Mark MacFarlane, an executive in its East African arm, will become operations chief.
Thompson said the board had been ‘disappointed’ by Tullow’s performance and would kick off a ‘thorough review’ of its operations in a bid to right the ship.
It will report back on the review in mid- January. Investors will also be keen at the January update to hear how the company plans to tackle its debt pile – which is estimated to be around £2bn at current levels.
The company spent eight years on the FTSE 100 before being bumped back down to the midcap index in 2015 shortly after oil prices nosedived.
The latest turmoil comes after a turbulent few months for Tullow shareholders. In August and
September its share price climbed after McDade said the company had struck ‘high value’ oil off the coast of Guyana in South America.
But in November its stock plunged after it warned the oil was actually much heavier and harder to process than it originally thought.
The company suspended its dividend, which was only reinstated at the beginning of 2019 after suspending them in 2015 when oil prices crashed.
In January, Tullow said it expected to pay ‘ no less’ than £76m out in dividends this year.