Tullow CEO stands down in management reshuffle
London, 11 January (Argus) — The founder of London-listed independent Tullow Oil, Aidan Heavey, is stepping down as chief executive later this year as part of a management shake-up at the company.
He will be succeeded by chief operating officer Paul McDade following the firm's annual general meeting in April. Heavey, who has served as chief executive for 31 years, will stay on as chairman for a transitional period of up to two years before retiring. Current chairman Simon Thompson is stepping down in April.
The shake-up follows a challenging year for Tullow in which profits remained under pressure and debt continued to rise. The firm said in a trading update today that it expects to deliver around $1.3bn of revenue in its full-year results next month, down from $1.6bn in 2015, and its bottom line will be hit by a number of one-off accounting charges triggered by lower oil prices and the impact of asset sales.
Tullow ended 2016 with net debt of $4.8bn, up from $4bn a year earlier. This was slightly better than previously forecast, thanks to cash flow from the 80,000 b/d capacity Tweneboa, Enyenra, Ntomme (TEN) project offshore Ghana and the firm's drive to contain costs and investment.
Tullow expects output from TEN, which started up in August last year, to underpin a rise in its production to 76,600 b/d of oil equivalent (boe/d) this year from 67,100 boe/d last year. TEN is forecast to produce 50,000 b/d this year.
Tullow's production growth this year will be constrained by continuing operational issues at the 120,000 b/d Jubilee field, offshore Ghana. Tullow expects Jubilee's gross output to fall to 68,500 b/d this year from 73,700 b/d last year, driven by the next phase of turret repair work on the field's floating production, storage and offloading (FPSO) vessel. The 2017 output forecast assumes 12 weeks of shutdown associated with the repairs.
The company has taken out insurance to reimburse it for repair costs and lost production at Jubilee. It received around $80mn from the insurance policies last year, which equates to 4,600 b/d of production. The firm expects insurance payouts this year to be the equivalent of 12,000 b/d of production.
Tullow's longer-term output growth ambitions remain focused on projects in Uganda and Kenya. The company earlier this week agreed a $900mn deal with Total to farm out a 21.6pc interest in Uganda's Lake Albert oil project. The deal, which comprises staged payments, will help Tullow fund its share of development costs and will increase the likelihood of a final investment decision around the end of this year, the company said. Meanwhile, Tullow continues to work on a pilot production project for its discoveries in Kenya's South Lokichar basin.
The firm plans to keep a tight rein on investment this year. It expects capital expenditure (capex) to fall to around $500mn this year from $900mn last year. The proportion of spending earmarked for exploration and appraisal will rise to 25pc this year from just 9pc last year.