By Richard Liebman
Still suffering from lower oil prices, Tullow Oil has announced that it will not pay a shareholder dividend payment for the foreseeable future. The company prefers to pay down debt and preserve cash for capital investments.
Last week, Tullow Oil reported mixed results for the 2016 year. Revenues declined by 21% to $1.2 billion, down from $1.6 billion in 2015, however, the Net Loss After Taxes of $597 million, compared favorably to the Net Loss of $1,037 million in 2015.
More importantly, Net Cash Flow of $774 million declined in 2016 from $967 million in 2015. With Capital expenditures of $857 million exceeding Cash Flow by $83 million in 2016, it’s no surprise that the Directors voted to suspend the Dividend. In 2017, Tullow expects Capital expenditures to drop to roughly $500 million, due to the completion of work at the TEN fields, located off the coast of Ghana, whose ownership is still being disputed by the Ivory Coast.
Tullow’s operations in Ghana are certainly one of its bright spots. Tullow Oil reported that in Ghana it produced 65,500 barrels per day and Tullow expects to produce from 78-85,000 barrels per day in 2017.
This includes factoring in the projected shutdown of the Jubilee Field later in 2017 to fix faulty drilling equipment.
Tullow Oil expects to be meeting soon with the new government to review its 2017 drilling plans.
Exploration Director at Tullow, Angus McCoss reported to Ghanaweb that Tullow looks forward to the approval of the development plan so Tullow can maintain full production in the Jubilee Field.
McCoss said: “We will be talking to the new government and expect that to have the Jubilee Field development plan approved by the middle of the year so that we can work in our real capacity as required to make sure we can maintain full production in Jubilee Field.”
Tullow Oil, with a reputation for exploring oil in exotic places in the world and does not draw the attention of the huge, multinational oil giants.
Currently, Tullow Oil is active in countries such as Ghana, Uganda, Kenya, Uruguay, Guyana, and Jamaica, which are not places one expects to see Exxon or BP.
Tullow Oil remains very optimistic that despite recording losses for the last three years, the combination of reduced capital needs, access to highly profitable light crude, and an active and successful exploration program will restore profitability and growth.