The Chief Executive Officer of the British-based oil exploration firm Tullow Oil Paul McDade has by mutual agreement resigned due to poor performance exhibited in its Key West African market.
In an update issued on Monday, Tullow said production fell beneath the Group’s expectations to warrant changes in stewardship.
“A review of the production performance issues in 2019 and its implications for the longer-term outlook of the fields has been undertaken and has shown that the Group needs to reset its forward-looking guidance,” read part of the issued statement.
Tullow’s net output is expected to lag at estimated 70,000 barrels of oil per day (bopd) over the next three years having run into notable operational headwinds in its Ghanaian operations.
Further, independent reserve audits are indicative of flat output following the downward adjustment in reserve volumes.
“In light of these new production forecasts, there will be a thorough reassessment of the Group’s cost base and future investment plans in order to allocate appropriate capital to the Group’s core production assets, development projects and continued exploration,” added Tullow.
Tullow’s Board has consequently resolved to fixing its free cash flows to include the reduction of capital expenditure, operating costs and corporate headwinds.
In the half year to June, Tullow posted a net profit of Ksh.10.5 billion ($103 million) supported largely from growth in discovered resources, lower operational costs and a slide in short-term debt maturities.
Nevertheless, revenues slid to Ksh.88.9 billion ($872 million) with free cash flows falling to Ksh.18.5 billion ($181 million) from Ksh.39.8 billion ($390 million) in a corresponding 2018 review.
The stance on the reassessment of existing projects is expected to affect the firm’s future capital expenditure in exploration to include its domestic operations under Tullow Kenya where the explorer has already sunk an estimated Ksh.200 billion ($2 billion) in collaboration with partners- Africa Oil and Total.
However, the board of Tullow Oil has marked its discoveries in Kenya as significant along those made in Uganda to point to hint at the retention of full scale exploration.
“These remain the key building blocks of our business today,” noted Tullow executive chair Dorothy Thompson.