Tullow Oil Plc’s Chief Executive Officer and exploration director quit after a slew of operational setbacks, marking the exit of the old guard after founder Aidan Heavey departed last year. Shares slumped.
CEO Paul McDade and exploration chief Angus McCoss resigned by mutual agreement and with immediate effect, London-based Tullow said Monday as it suspended the dividend. Both had been stalwarts at the company for over a decade, presiding over discoveries from West Africa to Guyana, but also a 90% slide in the share price since 2012.
“Whilst financial performance has been solid, production performance has been significantly below expectations from the group’s main producing assets, the TEN and Jubilee fields in Ghana,” Tullow said in a statement. Group output next year is forecast at 70,000 to 80,000 barrels a day — down from the 87,000 a day expected for this year — and production for the following three years will hover around the bottom of that range.
“This is likely to have a negative impact on the valuations of Tullow’s key assets,” Al Stanton, an analyst at RBC Europe Ltd., said in a note. “We expect the pace of exploration activity, and therefore news flow, to be reined in.”
The shares tumbled 43% in London to 80.38 pence as of 8:06 a.m. local time. They have dropped 55% this year.
The executive departures come after a year of disappointments at Tullow, where technical difficulties have hampered output in Ghana, projects in Uganda and Kenya have faced delays, and results from wells in Guyana missed expectations. The company reduced its 2019 production forecast several times as the glitches in Ghana dragged on.
Dorothy Thompson has been appointed executive chair on a temporary basis and Mark MacFarlane, executive vice president of East Africa and non-operated, has been appointed chief operating officer in a non-board role, according to the statement. Les Wood continues as an executive director and chief financial officer. The board has started a process to find a new CEO.
The company will reduce capital expenditure, operating costs and corporate overheads, it said. It sees underlying free cash flow next year of at least $150 million at $60 a barrel after capital investment of about $350 million