No dividends for Tullow shareholders
Shareholders of oil exploration company, Tullow Oil, will for the second time have their dividends ploughed back into the business as the company continues with steps to cut cost, pay off its debts and restructure its operations.
Advertisement
According to managers of the company, falling crude oil prices made 2015 a challenging year for the oil and gas industry and Tullow was not spared the adverse effects.
Its group sales revenue slowed to US$1.6 million in 2015, with a net debt estimated at US$4.5 billion.
“The restructuring of Tullow’s business has not been achieved without sacrifice. Our shareholders have seen their dividends suspended for the second year and many members of staff have being made redundant, and those remaining have seen their workload increased,” Executive Chairman of Tullow Ghana, Mr Ike Duker, told shareholders at a forum in Accra.
He said the ‘sacrificial’ measures were expected to provide the company with substantial headroom and liquidity to deliver on its strategy.
Although the news of no dividends did not go down well with shareholders, management maintained its position, banking its hope on the Tweneboa-Enyera-Ntomme (TEN) project which comes on stream by mid-2016.
With first oil from TEN remaining on target, Tullow Oil hopes to make some profit, pay off its debt and begin to pay dividends to shareholders from 2017.
The Chief Executive Officer (CEO) of Tullow Oil, Mr Aidan Heavey, explained that the company had to increase its borrowing to finance the US$5 billion TEN project in spite of a slash in its cash flows in the face of falling crude oil prices.
Other Trending Stories
“The TEN project, which remains on track, will increase our net West Africa oil production to over 100,000 barrels of oil per day (bopd) by the end of 2016, generating substantial cash flows and placing Tullow in a strong position when the sector recovers,” he said.
TEN project drives local content
Tullow doubled its investments in the local economy from US$123.6 million in 2014 to about US$226 million in 2015.
This was in a bid to increase local content participation in 2015, especially for the Tweneboa- Enyera- Ntomme (TEN) offshore oil project.
The increased spending was on local contracts to provide specialised services such as fabrication and construction, marine operations and logistics, civil engineering and construction.
The Managing Director of Tullow Ghana, Mr Charles Darku, said the focus was not only to increase local participation, but capacity building remained a priority of the company.
He said 30 Ghanaians with local company, Modec, on secondment worked on the conversion of the Floating Production Storage and Offloading (FPSO) John Atta Mills in Singapore.
“75 per cent of the workforce of FMC Technologies which worked on assembling subsea Christmas trees are Ghanaian. Twelve have been given extensive training at the company’s headquarters in Houston, Texas, USA” he said.
He explained that as part of the capacity building framework, the Welder Training School at the Regional Maritime University by Modec was refurbished as part of the TEN project contract.