Shares in FTSE 250 oil firm Tullow Oil (TLW) have fallen 60% to 57p as its production guidance lies in tatters, its dividend is suspended and chief executive Paul McDade and executive officer Angus McCoss have both quit.
Output is expected to be lower than previously forecast in 2020 and subdued in the following three years.
The company also says it is reassessing its cost base in light of the production downgrades and will cut capital expenditure, operating costs and corporate overheads.
Tullow Oil had previously announced that the performance of its TEN and Jubilee fields in Ghana had been significantly below expectations.
Production in 2020 is forecast to average between 70,000 and 80,000 barrels of oil per day (bopd), down from around 87,000 bopd expected in 2019.
Production for the following three years is expected to average around 70,000 bopd.
Dorothy Thompson has been appointed executive chair of the company on a temporary basis, while it looks for a new CEO.
AJ Bell investment director Russ Mould says: ‘The news represents a continuation of the problems which have dogged the company ever since its share price peaked more than seven years ago.
‘The company’s skill-set was in exploration - it enjoyed notable discoveries in Ghana and Uganda in the mid-noughties - and it has clearly found the transition to being more of a producer and developer of hydrocarbons more difficult.’
Broker Cantor Fitzgerald adds: ‘A bit of a kitchen sinking from Tullow, following on from last month’s disappointing trading update (and precipitous price drop). Investors may well agree that a reset is the correct approach.’
The company is next due to update the market on 15 January, an announcement investors may now be awaiting with bated breath as a review into the company’s operations continues.
