Tullow Oil expected to restore annual dividend

By Geoff Percival

Tullow Oil is likely to pay shareholders a “modest” dividend based on its 2018 performance, a leading resources analyst has claimed.

The Irish-founded exploration company last paid a dividend in 2014.

In February, on the back of Tullow reporting its first annual operating profit for four years, the company’s chief executive Paul McDade said the dividend question was “back on the table” as part of the debate as to how to treat additional cash flow — with further debt reduction and asset investment also considered.

Chief financial officer Les Wood added fuel at Tullow’s agm in April, saying: “This year we’ll be maximising cash flow with a focus on strengthening the balance sheet. And, with our continued performance over the year, that allows us to consider return to the shareholders.”

Merrion analyst Darren McKinley said he expects Tullow to pay a “modest” or “token” dividend to shareholders based on its 2018 performance, before being in a better position to pay a more considerable one based on 2019 earnings. Improved production, a stronger balance sheet, and less debt repayment requirements will allow this, he said.

Shares in Tullow Oil fell by nearly 5%, before a slight recovery, despite an upbeat trading statement wherein Tullow increased its production targets.

The company has upgraded its 2018 oil production target to 86,000-92,000 barrels of oil per day, up from 82,000-90,000 bopd. When gas is included, the company expects to produce 89,000-95,000 barrels of oil equivalent per day.

Tullow is due to shortly embark on multi-year drilling in Africa and South America, while final investment decisions are pending this year and next on assets in Uganda and Kenya.

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