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Tullow Oil Suspends Dividends for Shareholders

BY Soko Directory Team · June 6, 2016 07:06 am

 

A report released to the shareholders of Tullow Oil stated that the company had suspended payments of dividends to them, slushed funding for new exploration and limited capital expenditure to key projects.

Tullow Oil Chairman Simon R Thompson said that there has been a relentless focus on cost control in 2015, where exploration expenditure was cut to $256 million from $799 million in 2014, adding that the capital expenditure was limited to key projects such as TEN in Ghana, that is expected to generate strong future cash flow even at low oil prices.

Aidan Heavy, the Tullow CEO, said that they noticed in early 2014 that the industry was changing: The rise of the US shale industry and the cost of both development and deep water exploration challenged existing models.

While the firm paid $0.4 as dividend per share in 2014, no dividend was paid to shareholders in 2015 on account of a net loss of $1,037 million for that year down from $1,640 paid in 2014 after taxes.

Read: Tullow Oil to Work with Kenya using Existing Infrastructure

The report stated that good progress continues to be made on development planning in Kenya The reduction in oil prices came at a time that Tullow had incurred heavy capital expenditure for the TEN multinational $5 billion project, which is expected to produce its first oil in August.

Shareholders have seen their dividend suspended and many respected and valued members of staff have been made redundant while many of those who remained have seen their responsibilities and workload increase,” said Tullow chairman Mr. Thompson.

Tullow is listed on the London, Irish and Ghanaian Stock Exchanges. The reduction in oil prices came at a time that Tullow had incurred heavy capital expenditure for the TEN multinational $5 billion project, which is expected to produce its first oil in August.

These measures were intended to build resilience in the face of falling oil prices in the last quarter of 2014. By mid-2014 crude oil prices had peaked at $115 per barrel, averaging $52 a barrel before falling further to below $30 a barrel by January 2016.

Overall, 2014/2015 was a difficult year as companies reduced capital expenditures with exploration budgets being the worst hit. According to a Wood Mackenzie report issued in August 2015, close to 46 major development projects had been deferred.

 

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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