Yet more trouble at Tullow Oil

Tullow Oil shares have plunged to a 16-year low after the company slashed its annual production forecast.

Photo taken on September 17, 2011  shows

2011 AFP

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.

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".

Recommended

Hold on to your oil and gas stocks
Energy stocks

Hold on to your oil and gas stocks

Oil and gas stocks have done very well in the last few months. But they’ve got a long way to run yet, says Dominic Frisby.
10 Nov 2022
Why there is still life in the energy bull market
Energy

Why there is still life in the energy bull market

A green power initiative on the Galapagos Islands demonstrates how the renewable energy transition will need to be supported by fossil fuels for some …
4 Nov 2022
Fuel prices could rise again as Opec cuts production
Oil

Fuel prices could rise again as Opec cuts production

Major oil-producing countries have decided to cut oil production by two million barrels per day – could this mean higher fuel prices?
7 Oct 2022
The best way to invest in oil and gas
Oil

The best way to invest in oil and gas

The bull market in fossil fuels and wider commodities has paused. But there is still plenty of scope for investors to profit, says Merryn Somerset Web…
13 Sep 2022

Most Popular

Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022
Gold or bitcoin: what will replace the US dollar?
Bitcoin & crypto

Gold or bitcoin: what will replace the US dollar?

As Russia and the West move further apart, there’s a growing need for a new global reserve currency. The US dollar could soon be replaced by gold or b…
6 Dec 2022
Radiator vs electric heater – which is cheaper?
Personal finance

Radiator vs electric heater – which is cheaper?

We compare the costs, pros and cons of radiators and electric heaters and see which one will help keep your energy bill as low as possible.
28 Nov 2022