Shareholders of Tullow Oil plc (LON: TLW) have seen their shares crash on Monday morning after the Chief Executive announced his departure within a hectic week of trading for the firm.
Tullow Oil have seen a very volatile few weeks of trading. In November, the firm saw their shares crash after a production warning was issued alerting shareholders.
Tullow had warned production was likely to be between 89,000 barrels and 93,000 barrels, lower than the 90,000 barrels to 98,000 barrels initially guided, which caused shares to sink.
One week ago, The FTSE250 listed firm saw their shares in green following a positive update on their Ugandan operations.
The Ugandan Government had been in lockdown with firms such as Total (EPA: FP) and CNOOC (HKG: 0883) over the taxes assed on Tullow’s plans to sell part of its stakes in Ugandan oil fields, however the governmental disputes seem to have progressed last week.
Today, the firm saw their chief executive and exploration director quit which caused shares to crash.
Shares in Tullow Oil crashed 58.05% to 59p following the announcement. 9/12/19 10:54BST.
Pat McDade, along with exploration director Angus McCoss, said they had quit the firm. The board said it was “disappointed by the performance of Tullow’s business”.
Tullow Oil saw more than £1.05 billion wiped off their market value at 9am this morning, which left the company only valued at £801.7 million.
The firm has suspended its dividend to shareholders, and “now needs time to complete its thorough review of operations”.
Dorothy Thompson, the company’s chair, said: “Despite today’s announcement, the board strongly believes that Tullow has good assets and excellent people capable of delivering value for shareholders.
“We are taking decisive action to restore performance, reduce our cost base and deliver sustainable free cash flow.”
Thompson has temporarily been installed as executive chair, as the firm kicks off its search for a new chief executive.
“The board has, however, been disappointed by the performance of Tullow’s business and now needs time to complete its thorough review of operations,” Executive Chairman Dorothy Thompson said.
The company said it expects full-year net production to average around 87,000 barrels of oil per day, reiterating its guidance from last month’s trading statement.
However, Tullow said that after a review of “production performance issues” this year, and the impact this could have on its fields’ performance in the coming years, it had changed its guidance.
Next year’s production is predicted to average between 70,000 and 80,000 barrels of oil per day (bopd), while over the next three years it expects an average of 70,000 bopd, which may leave a bitter sweet taste in the mouths of shareholders.
Tullow said it had picked out “a number of factors” that have caused the reduction in guidance.
“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,” it said.
Where competitors in the market such as Premier Oil saw their shares rally a few weeks back, the senior board at Tullow Oil have a massive job to turnaround a sinking ship.
Certainly the firm will have to go way beyond a few positive trading updates to appease shareholders in what has been a disastrous Monday morning for the firm.