Belfast Telegraph

Tullow Oil boss shrugs off takeover speculation

By Gavin McLoughlin

Oil company Tullow will continue as a stand-alone entity, its chief executive has said.

Analysts have flagged the company as a potential takeover target for a larger oil and gas explorer in recent times.

But Aidan Heavey has said that the company hadn't been approached and he believes the status quo is best.

"I think we are best as a stand-alone entity, we're very much an Africa-focused business, it's a very unique type of business in Africa, and I think we'll add more value to shareholders by doing what we do best, which is focusing on Africa... we're basically alone there now because most of our competitors are gone," he said.

"There's a lot of talk about major oil companies buying Tullow but the last few years have caused a dent in the pocket of most of the companies. Nobody has the cash any more, and we're quite a big bite.

"I don't think the majors will be able to match us in relation to speed of doing things, and there will be a lot of opportunities in this new era for oil."

The company, which has a market capitalisation of £1.75bn and net debt of $4.7bn, is set to begin producing oil next month at a major project in Ghana known as TEN.

Mr Heavey aims to bring Tullow's debt down to around $4bn over the next year.

"Our debt is not as bad as people think it is... we can handle the debt levels that are there at these oil prices and lower because all our commitments are finished in TEN," he said.

"The bulk of the debt was built up because of the TEN project, now that TEN comes on stream, it adds 50% to our production in West Africa and we're very cash-positive for the second half of this year, so our debt will naturally come down."

Mr Heavey said Tullow will also look to sell assets in Norway, the UK and Denmark.

"That will impact debt as well so we can adjust our capital spend to suit our cash flow. With TEN finished, it transforms the ability of the business," he said.

Tullow posted a pre-tax profit of $24m in the first half, compared to a $10m loss in the same period last year.

It lost $1bn after tax in 2015, writing off $749m in exploration costs - with the industry hit by a plunge in oil prices.

Belfast Telegraph