Predictably, the steep fall-away in energy prices sapped sales for Tullow Oil (TLO) at the half-year mark. The Africa-focused driller was forced to can its dividend at the start of 2015 after reporting its first pre-tax loss in 15 years. If anything, trading conditions have deteriorated in the intervening period. But a half-year earnings loss of $67.7m (£43.7m) was actually slightly better than consensus estimates.
Tullow's reported numbers were insulated to a degree by its hedging programme. But the longer the oil price slump continues, the costlier these strategies become. Price weakness also feeds into pressure on cash flows, which is a worry given that finance costs were up 52 per cent over the 2014 level.
Tullow's chief executive, Aidan Heavey, confirmed that good operational progress was being made on the company's major development projects. The highly anticipated 'Ten' project in Ghana is on budget and on track for first production midway through next year. The development promises to transform Tullow's production profile and cash flows. The only other significant revelation on the operational front was a modest lowering of production guidance on its key Jubilee field as a result of unexpected problems with compressed gas.
Barclays gives an adjusted EPS of 7¢ for 2015, against 27¢ last year.
| TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 237p | MARKET VALUE: | £2.2bn | |
| TOUCH: | 237-238p | 12-MONTH HIGH: | 767p | LOW: 233p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 412¢* | NET DEBT: | 95% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 1.26 | -28.9 | -8.3 | 4.0 |
| 2015 | 0.82 | -10.2 | -7.5 | nil |
| % change | -35 | - | - | - |
£1 = $1.55. *Includes intangible assets of $4.5bn, or 447¢ a share | ||||
