Tullow Oil returns to paying dividends
LONDON: Africa-focused Tullow Oil will return to paying dividends, which it suspended in 2015 due to the oil price crash, and expects to pay out at least $100 million from next year, with an option for a special dividend for this year, it said.
Tullow forecast its net debt would drop to $2.8 billion by the end of the year and slightly raised its full-year free cash flow to $700 million earlier this month, helped by trimming its capital expenditure.
Tullow has around 1.39 billion outstanding shares, according to Refinitiv Eikon data, implying a dividend of at least around $0.07 per share.
“Tullow has made excellent operational and financial progress over the past 18 months,” Chief Executive Paul Mcdade said in a statement on Thursday.
“Having reached our target of being a balanced self-funding exploration and production business and having embedded cost discipline across the group, this is the right time to reinstate a dividend and focus on our plans for growth.”
The dividend will be paid on a semi-annual basis based on the free cash flow Tullow makes while keeping debt and investment in mind, it said, adding the board will look at other types of returns to shareholders if cash abounds.
“With respect to the 2018 financial year, the board will review the potential for a one-off ordinary dividend after the year-end financial close,” Tullow said. Tullow, with a market cap of around 2.5 billion pounds ($3.21 billion), had raised the possibility of returning to paying dividends in April.