Total to be named new owner of Tullow Ghana and operator of Jubilee Oilfield
Information gathered by www.newsguideafrica.com is
that, Tullow Oil Ghana (Operator of Jubilee Oilfield) is in search of a new
owner in Ghana with the most probable being Total Oil - the French giant, whose
operations overlap all of Tullow’s assets.
It is established that Total, unlike Tullow, has a strong
reputation as an efficient offshore operator and also has links to cash-rich
Qatar Petroleum. This news is breaking in the same week that Tullow Oil shocked the
oil world when the Chief Executive Officer, Paul McDade and Exploration
Director, Angus McCoss, all Board Executive members, resigned with immediate
effect by mutual agreement over underperformance over the years. Tullow also
suspended dividend payments.
A Financial and Energy Expert is of the view that, although all
is not gloomy with the current operations and production at the oilfields in
Ghana; Tullow still has one of the world’s best assets in Jubilee Oilfield - a
low-cost producer and now considered a brownfield and a cash cow. However, Tullow has to transform from an
exploration to a matured producing company; this will mean major restructuring
and massive layoffs.
“Let’s hope Ghana government will stand firm to ensure that
the right “fat” is cut - mainly expensive unnecessary head office staff and
expatriates, NOT the highly qualified lower-paid Ghanaians”, Alex Mould, former
Chief Executive of the Ghana National Petroleum Corporation.
Mr Mould further admonished that, the partners should make
sure, the Operator of Jubilee Field (Tullow) eliminates those “unnecessary
highly paid cushy jobs at their CHISWICK Head Office”, whose time writing
charges are suspected to be inflating the cost of oil production of their Ghana
operations.
In the meantime, “the Ghana government needs to negotiate
with the contractor group partners to ensure that there are minimal Ghanaian
casualties at Tullow Ghana Limited — a Company registered in Jersey, UK and
indirectly owned by Tullow Oil plc, through its Dutch subsidiary”, he added
Jubilee offshore oilfield was discovered in 2007 by Kosmos
Energy and developed by Tullow Oil.
Equity partners of the Deepwater Tano block are; Tullow with
49.95%, Kosmos with 18%, Oxy with 18%, PetroSA Ghana with 4.05%, and Ghana
National Petroleum Corporation (GNPC) with 10%.
While West Cape Three Points is held by Tullow with 22.9%,
Kosmos with 30.88%, Oxy with 30.88%, PetroSA Ghana with 1.85%, GNPC with 10%,
and EO Group with 3.5%.
According to experts, it is imperative that the government of Ghana
has emergency meetings with the top echelon of Tullow to discuss: the quantum
of investment needed in Greater Jubilee to sustain production average of 100+
kbbl/d levels; Tullow’s ability to meet cash calls for further development
drilling giving their balance sheet challenges; and Tullow Oil Plc giving the
Ghana business - Tullow Ghana Limited - the autonomy needed to properly manage
the Jubilee and TEN assets as against driving these businesses to provide, at
any cost, the needed cash flows to sustain Tullow Oil Plc’s ambitions in Guyana
and in East Africa.
It is believed that Tullow’s unsuccessful forays into East
Africa is the main reason for the strain on Tullow Oil Plc’s fragile balance
sheet. Tullow’s next hope was Guyana, but miscommunication of the type of oil
and the difficulties associated with producing it have caused investors to lose
hope on this once shining beacon in the E&P world.
Meanwhile, the London-based International Oil Company on Monday
noted that, “Whilst financial performance has been solid, production
performance has been significantly below expectations from the group’s main
producing assets, the TEN and Jubilee fields in Ghana.”
The company’s production for next year is pegged at 70,000
to 80,000 barrels a day, down from the 87,000 a day expected for this year. As
well, production for the next three years will hover around the bottom of that
range.
“This is likely to have a negative impact on the valuations
of Tullow’s key assets,” Al Stanton, an analyst at RBC Europe Ltd., said in a
note. “We expect the pace of exploration activity, and therefore news flow, to
be reined in.”
The executive departures come after a year of
disappointments at Tullow, where technical difficulties have hampered output in
Ghana, projects in Uganda and Kenya have faced delays and results from wells in
Guyana missed expectations. The company reduced its 2019 production forecast
several times as the glitches in Ghana dragged on.
The shares sank 57% to 60.64 pence as of 10:28 a.m. London
time, the biggest decline since they started trading in the city 30 years ago.
The stock has dropped 66% this year and more than 90% since 2012. Tullow’s
dollar notes due 2025 declined the most since they were issued in March 2018.
“There is a risk that the market will lose sight of the true
value of our underlying assets,” interim Chairman Dorothy Thompson said by
phone, insisting that the Jubilee development and Uganda reserves remain
world-class oil fields. The company is conducting a review “to create a
sustainable business, which we believe we can do,” she said.
Thompson declined to comment on whether Tullow is actively
seeking buyers but reiterated the standard position that the company would
always be open to any offers that were attractive to shareholders.
Mark MacFarlane, executive vice president of East Africa and
non-operated, has been appointed a chief operating officer in a non-board role,
according to a Tullow statement. Les Wood continues as a chief financial
officer. The board has started a process to find a new CEO and is talking to
internal and external candidates, Thompson said.
The company will reduce capital expenditure, operating costs
and corporate overheads, it said. It sees underlying free cash flow next year
of at least US$150 million at US$60 a barrel after a capital investment of
about US$350 million.
CFO Wood said that Tullow is in a “strong financial
position” and that “reducing our debt pile will continue to be our priority.”
He conceded that “in the short-term, it will be going a little slower.”
0 comments: