Shares in Tullow Oil (TLW) shed as much as 8 per cent after the Africa-focused explorer posted wider than expected losses for 2015. Though revenues held up reasonably well given the pull-back in crude prices, a $749m exploration pre-tax write-off, together with a $406m impairment charge and an onerous service contract charge of $186m conspired to push operating losses to $1.09bn.
Given the oil price slump, such pain was probably inevitable. Looking ahead, Tullow has three key factors in its favour: aggressive hedging which guarantees $75-a-barrel oil for just under half of this year's expected production, a sharp cut in capital expenditure after the imminent completion of the TEN project, and some remarkably high-margin oil. Indeed, chief executive Aidan Heavey believes savings at the Jubilee and TEN fields in Ghana can bring costs down to below $10 a barrel there by 2017.
Less positively, net debt jumped 30 per cent last year to $4bn, ahead of a recalculation of the group's reserve-based lending in March, though management believes self-help measures so far will smooth the dialogue with lenders.
Investec is forecasting a 38.1¢ loss per share and pre-tax losses of $233.6m this calendar year, against previous estimates of 114¢ and $1.3bn in 2015.
TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 157p | MARKET VALUE: | £1.43bn | |
| TOUCH: | 156.5-157.1p | 12-MONTH HIGH: | 457p | LOW: 116p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 346¢* | NET DEBT: | 127% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 2.30 | 1.13 | 72.5 | 12 |
| 2012 | 2.34 | 1.19 | 68.8 | 12 |
| 2013 | 2.65 | 0.31 | 18.6 | 12 |
| 2014 | 2.21 | -2.05 | -171 | 4.0 |
| 2015 | 1.61 | -1.30 | -114 | nil |
| % change | -27 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of $3.56bn, or 391¢ a share. £1=$1.45 | ||||
