Unsurprisingly, Tullow Oil (TLW) decided to lead with first production from the TEN field in its summary of 2016's highlights. But, while building Ghana's second major oil and gas development on time and on budget is a big achievement, full-year results for the FTSE 250 producer contained enough sources of concern for investors to mark the shares down by 5 per cent.
Chief among these concerns was a higher-than-expected attributable loss of $600m (£478m), partly due to higher exploration charges and impairments. This might not be such an issue if Tullow's balance sheet was less stretched, but because net debt stood at $4.8bn at the end of December, investors are getting nervous that the benefits of TEN's 50,000 barrels of daily production this year will be swallowed by interest payments.
Post-period, one source of support arrived in the shape of a $900m farm-down agreement with Total to develop its exploration interests in Uganda. However, the majority of this payment will be deferred to fund Tullow's share of the upstream project.
Prior to these results, Panmure Gordon was expecting full-year EPS of 11¢ and adjusted pre-tax profits of $141m (up from 1.5¢ and a loss of $745m in 2016).
TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 281p | MARKET VALUE: | £2.57bn | |
| TOUCH: | 280.4p-281p | 12-MONTH HIGH: | 352p | LOW: 138p |
| DIVIDEND YIELD: | NIL | PE RATIO: | na | |
| NET ASSET VALUE: | 244¢* | NET DEBT: | 213% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 2.34 | 1.19 | 68.8 | 12 |
| 2013 | 2.65 | 0.31 | 18.6 | 12 |
| 2014 | 2.21 | -2.05 | -171 | 4 |
| 2015 | 1.61 | -1.30 | -114 | nil |
| 2016 | 1.27 | -0.91 | -65.8 | nil |
| % change | -21 | - | - | - |
Ex-div: na Payment: na £1=$1.25 *Includes intangible assets of $2.0bn, or 222¢ a share | ||||
