Shares in Tullow Oil plc (LON:TLW) have nosedived on Thursday afternoon as the firm revealed that it had swung to a loss across 2019.
Tullow Oil have seen a tough few weeks of trading, and the share price has seen a downward trend.
The firm revealed today that following the publishing of their annual results – it will cut the size of its’ workforce by over a third.
The oil and gas exploration firm reported a $1.7 billion pretax loss in 2019 – which showed a massive slump from the $85 million profit figure recorded in 2018.
Notably, turbulence in the macroeconomic environment and volatile oil prices saw their free cash flow fall 13% to $355 million in 2019 from $411 in 2018.
Notably, Tullow added that their cash flow may only reach between $50m to $75m this year based on an oil price of $50 per barrel.
Total revenue figures also took a bruising, as this fell from $1.8 billion to $1.6 billion over the same period – representing a fall of almost 10%.
Net debt did reduce on a better note from $3 billion to $2.8 billion – however the firm have suspended their $100m dividend.
Production figures also fell by 3.6% – with the 2019 average totaling 86,800 barrels of oil per day equivalent.
Notably, Tullow were also relegated from the FTSE 250 following a tough few months for the firm.
Dorothy Thompson, Executive Chair, Tullow Oil plc, commented today:
“This has been an intense period for Tullow as we have worked hard on a thorough review of the business which has led to clear conclusions and decisive actions. We are focused on delivering reliable production, lowering our cost base and managing our portfolio to reduce our debt and strengthen our balance sheet. Even with recent events in oil markets, Tullow’s assets remain robust: we are a low-cost African oil producer, with a strong hedging position, substantial reserves that underpin our business and a high potential exploration portfolio.”
Tullow’s shares crash in November
In November, the firm saw their shares crash following a warning on their 2019 production figures.
During 2019, London-based oil producer Tullow sees production averaging 87,000 barrels of oil per day, but 2019 guidance was in November.
In July, 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 dive.
Chief Executive departs
A few weeks on, the Chief Executive of the firm announced that he would be departing.
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”.
The company said it expects full-year net production to average around 87,000 barrels of oil per day, reiterating its guidance from Novembers’ 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.
Shares in Tullow Oil trade at 12p (-30.22%). 12/3/20 16:39BST.
