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(Alliance News) - Tullow Oil PLC is making good progress on its strategic review, it said Wednesday, as it looks for a new chief executive.
Tullow announced the review early in December, following continued problems at producing fields in Ghana. At the same time, then-chief executive Paul McDade and exploration director Angus McCoss both left the firm, while the dividend was also suspended.
The energy firm said on Wednesday progress is being made both in the review and in looking for a new CEO.
"The board's business review covering all areas of Tullow's operations, cost-base and reporting is progressing well. The board is confident the outcomes will deliver significant improvements to the group's organisational structure, major reductions in general & administrative costs and a more efficient and effective business," said Tullow.
"Actions taken in December included the implementation of a smaller, more focused interim executive team and initial restructuring of the next level of leadership. Since then, work has focused on simplifying the structure of the organisation and these changes will be implemented in the coming months."
"The next phase of the review will focus on the investment plans for each of the group's major assets," Tullow added.
At the time of the December review, Tullow also reset production guidance from the TEN and Jubilee oil fields in Ghana. For 2019, it guided for 87,000 barrels of oil per day for 2019, and for between 70,000 barrels and 80,000 barrels in 2020.
Tullow confirmed Wednesday production in 2019 was at 86,700 barrels of oil per day, and it reaffirmed the 2020 guidance.
Financially, Tullow guided for revenue in 2019 of approximately USD1.7 billion, gross profit of around USD700 million, and capital expenditure around USD490 million.
Free cash flow is seen at approximately USD350 million, with net debt falling to USD2.8 billion. As of June's end, net debt was USD2.9 billion.
In 2018, revenue was USD1.86 billion, gross profit USD1.08 billion, and free cash flow USD411 million.
However, Tullow will also be booking pretax impairments and exploration write-offs to the tune of USD1.5 billion, due to a USD10 per barrel fall in the company's long-term accounting oil price assumption and a reduction in reserves at the TEN field.
"Since our December announcement, Tullow's senior team has been working hard on a major review focused on delivering a more efficient and effective organisation," commented Executive Chair Dorothy Thompson.
"The fundamentals of our business remain intact: recent reserves audits demonstrate we have a solid underlying reserves and resources base in West and East Africa, our producing assets continue to generate good cash flow and we retain a high-quality exploration portfolio."
"The board and senior management are confident of the long-term potential of the portfolio and see meaningful opportunities to improve operational performance, reduce our cost base, deliver sustainable free cash flow and reduce our debt," she continued.
Tullow will be released financial results for 2019 on March 12.
Shares were 1.0% lower on Wednesday in early trade in London at 58.60 pence each, nearly a quarter of their price a year ago.
By George Collard; georgecollard@alliancenews.com
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