Tullow Oil Plc has disclosed that it is open to receiving offers for the take-over of the company as challenges from its Ghana operations begin to bite hard.
The company had faced setbacks in its Jubilee and TEN fields culminating in the resignation of the company’s CEO, Paul Mcdade, on Monday after more than two years in charge.
The CEO’s resignation was followed by that of Head of Exploration, Angus McCoss, who also left the same day.
A conference call after the major development stated that Tullow was open to receiving offers to acquire the company “at the proper value.”
Disappointment
Executive Chairman of the company, Dorothy Thompson commenting on the latest development said, “the board has, however, been disappointed by the performance of Tullow’s business and now needs time to complete its thorough review of operations.
“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,” she said.
According to the company, a review of the production performance issues in 2019 and its implications for the longer-term outlook of the fields has been undertaken and has shown that the Group needs to reset its forward-looking guidance.
2020 Group production is forecast to average between 70,000 and 80,000 bopd. Group production for the following three years is expected to average around 70,000 bopd,” the company said in a statement.
Poor performance
A number of factors have been identified that have caused this reduction in the company’s production guidance.
On the Jubilee field, these factors include significantly reduced offtake of gas by the Ghana National Gas Company which Tullow makes available at no cost, increased water cut on some wells, and lower facility uptime.
At Enyenra (one of the TEN fields) mechanical issues on two new wells have limited the well stock available and there is faster than anticipated decline in this field. The company added that the non-operated portfolio is performing well, and production is expected to be sustained for the medium term.
Independent reserves audits carried out during the year indicate that oil reserves are likely to remain broadly flat at year-end 2019 compared to the previous year-end (excluding the impact of 2019 production).
The audits show increased oil reserves for Jubilee, Ntomme (one of the TEN fields) and the non-operated fields which are largely offset by a c.30% decrease in Enyenra reserves.
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