Tullow Oil shares have plunged to a 16-year low after the company slashed its annual production forecast from 87,000 barrels of oil a day currently to 70,000, say Julia Kollewe and Jillian Ambrose in The Guardian. Tullow has also scrapped its dividend and announced that its CEO and exploration director have left.
Investors should be used to trouble at Tullow. Problems have "dogged the company" for the last seven years. Just last week Tullow told investors that two major projects in Guyana may be "less lucrative" than initially projected.
Given this "annus horribilis", it's only right that it's "the end of the road" for the executives, says Anthony Hilton in the Evening Standard. But still worse news may be on the way, since the dividend suspension and spending cuts won't be enough to cover the "daily cash shortfall of nearly a million dollars", especially given the group's large debt load. The best shareholders can hope for is a takeover by the likes of Exxon or a private-equity firm, though buyers may not feel Tullow's "accident-prone assets" are worth the trouble.
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Tullow's "market meltdown" is yet more bad news for those investors who "jumped in" after the 2015 oil-price slump believing it was a chance to snag "a quality investment at a temporarily depressed price", says Robert Smith in the Financial Times. While this optimism allowed Tullow to raised $705m in 2017, a look across the Atlantic would have shown that even the "most sophisticated investors" have "fallen on their faces" betting on recoveries at energy companies with "strained balance sheets".
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