Tullow Oil’s new chief executive Paul McDade has said he will focus on financial discipline after the Irish-founded exploration firm took a $600m (€528m) hit from deflated oil prices in the first half of the year.
“Tullow continues to make good progress despite tough market conditions...Financial discipline and efficient capital allocation will be a key focus of my tenure as CEO as we seek to deleverage the company and return to growth even at low oil prices,” Mr McDade said in Tullow’s first trading update since the former chief operating officer took over from Aidan Heavey as chief executive in April.
Tullow is due to publish first half results at the end of next month. However, in its trading update it said gross profits for the first six months amounted to $300m, up from $200m for the same period last year.
It also reported a 17% year-on-year fall in net debt to $3.8bn, helped by it turning to shareholders in March to raise $750m via a rights issue in order to soften its debt mountain. Tullow has also shaved its full-year spending guidance from $500m to $400m. However, the company also said it expects to incur $600m in a non-cash impairment of property, plant and equipment due to reduced oil price forecasts.
“Although non-cash, [the impairment charge] is a reminder of the pressure the sector is under,” said RBC Capital analyst Al Stanton.
Oil prices reached their highest level in a week yesterday, but slipped to a ten-month low of $44.50 per barrel last week, while Tullow Oil’s share price has halved since the beginning of the year.
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