LONDON MARKET OPEN: Tullow Oil Shares Halve As Suspends Dividend

(Alliance News) - Stock prices in London opened lower on Monday, having ended sharply higher on Friday, while Tullow Oil weighed on the FTSE 250 index after it suspended its dividend, cut its guidance, and waved goodbye to its chief executive.

The FTSE 100 index was 12.22 points, or 0.1%, lower at 7,227.44 early Monday. The blue chip index closed up 101.81 points, or 1.4% at 7,239.66 on Friday.

The mid-cap FTSE 250 was down 27.68 points, or 0.2%, at 20,905.35, and the AIM All-Share was flat at 908.31.

The Cboe UK 100 index was down 0.5% 12,261.20. The Cboe UK 250 was flat at 18,845.66 and the Cboe UK Small Companies also was flat, at 11,421.40.

On the London Stock Exchange, Tesco was the best blue-chip performer, up 4.5% after the UK's largest supermarket chain confirmed the potential sale of its Asian business, though noted a review of options remains in the early stages.

Tesco, which has operations in both Thailand and Malaysia, said the review of the business began after receiving "inbound interest" from potential buyers. The statement from the grocer came after the Times earlier on Monday had reported the company is mulling a potential sale worth up to USD9 billion.

At the other end of the large-cap index, Croda International was down 1.6% after Barclays downgraded the speciality chemicals company to Equal Weight from Overweight.

In the FTSE 250, Senior was up 3.9% after the engineer said it was considering the sale of its aerostructures business.

Tullow Oil was by far the worst mid-cap performer, down 50% after the oil and gas company suspended its dividend, "reset" its future production guidance, and announced the departure of Chief Executive Officer Paul McDade.

Tullow said Dorothy Thompson will move from non-executive chair to executive chair role on a temporary basis, and it has started the search for a new CEO.

Following underperformance from its main oil producing assets - the TEN and Jubilee fields in Ghana - Tullow said it needs to reset its forward-looking guidance. For 2020, group production is forecast to average between 70,000 and 80,000 barrels of oil per day and group production for the following three years is expected to average around 70,000 bopd.

In November, the Chiswick, London-based oil producer Tullow had said it expected production to average 87,000 barrels of oil per day for 2019.

Further, in 2020, the company expects to generate underlying free cash flow of at least USD150 million at USD60 a barrel after a capital investment of USD350 million. Considering the level of expected free cash flow, Tullow has decided to suspend its dividend.

Back in July, Tullow declared a 2.35 US cent interim dividend, in line with a plan to return USD100 million to shareholders in 2019. The interim payout was worth USD33 million. Tullow provided no further details about its dividend plans on Monday.

Elsewhere, Amigo Holdings was up 2.2% after the guarantor loans provider said Richmond Group exercised its right to appoint non-executive directors to the board and named James Benamor and Kelly Black as its choices.

Benamor is the founder and former CEO of Amigo and holds a 61% stake in the firm via his holding company Richmond. Amigo floated in June 2018 with a market capitalisation of GBP1.31 billion making Benamor one of the wealthiest businessmen in the UK. Since then however, the stock has plummeted, reducing the company's value to GBP288 million. Benamor had departed Amigo in September 2018 to focus his attention on Richmond.

In light of Benamor's return, Chair Stephan Wilcke said he does not intend to seek re-election at the company's next annual general meeting in 2020. Hamish Paton also has resigned as CEO, subject to a 12 month notice period. Amigo said the sweeping board changes do not constitute a takeover offer.

The pound was quoted at USD1.3160 Monday morning, up from USD1.3105 at the London equities close Friday, ahead of the UK general election on Thursday.

As Britons get set to cast their votes, the general election campaign enters its frenetic final stages on Monday, with Prime Minister Boris Johnson and Labour leader Jeremy Corbyn seeking votes ahead of Thursday's crucial poll.

The euro was quoted at USD1.1061, up from USD1.1045 at the European equities close Friday. Against the yen, the dollar was trading at JPY108.57, down from JPY108.71 late Friday.

Brent oil was quoted USD64.20 early Monday, flat against USD64.15 a barrel at the London equities close Friday.

Gold was quoted at USD1,461.30 an ounce early Monday, up from USD1,459.85 at the London equities close Friday.

The Japanese Nikkei 225 index closed up 0.3% on Monday. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong closed up 0.1%.

China's foreign trade continued to decline in November compared to the same period last year, according to official data, as the trade war with the US weighs on the giant Asian economy.

Exports dropped 1.1% from November last year, according to customs data released in Beijing on Sunday. It was the fourth month in a row of weakening exports. Experts had actually expected an increase. Imports were up by 0.3% year-on-year, the first rise since April.

Trade talks between the US and China will continue to dominate sentiment with the US set to enact a fresh round of tariffs on Chinese goods on December 15.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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