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Tullow Oil CEO Resigns After Company Loses Half Its Value

London-listed Tullow Oil (LON:TLW) saw its shares tank by more than 60 percent midday in Europe on Monday, after the Africa-focused oil explorer and producer slashed production guidance and suspended dividend amid poor production results and as its chief executive stepped down with immediate effect.

Tullow Oil, which is active in Ghana, Kenya, and Uganda, has seen recently setbacks in its flagship projects in Africa.

In Ghana, production performance has been significantly below expectations from the Group’s main producing assets, the TEN and Jubilee fields, the company said in a statement today, slashing its production guidance for FY 2020 from the FY 2019 forecast.

The company saw a deal for an oil pipeline in Uganda fall through in September, as Tullow Oil, France’s Total, and China’s CNOOC terminated an agreement to sell part of Tullow’s stake in the Lake Albert project because “the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers.” 

Tullow warned then that this setback would likely delay the final investment decision on the Uganda pipeline project, initially expected for 2019.

In Kenya, Tullow Oil also has to reach an FID on field production.

Considering the new production forecasts and the need to reassess the cost base and expected free cash flow, Tullow Oil’s board of directors decided to suspend dividends.

In addition, CEO Paul McDade and Exploration Director Angus McCoss have resigned from the Board of Tullow by mutual agreement and with immediate effect, the company said on Monday.

Executive Chair Dorothy Thompson thanked the two managers for their work at Tullow, but noted that the board has been disappointed with the poor performance of the African assets.

“The Board has, however, been disappointed by the performance of Tullow’s business and now needs time to complete its thorough review of operations,” Thompson said, adding that the company would provide a full financial and operational update at Tullow’s full-year results in February, with an update on progress expected on January 15.

By Tsvetana Paraskova for Oilprice.com

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