Tullow Oil share price rallies as company returns to profit

on Jul 27, 2016
Updated: Feb 27, 2024
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Shares in Tullow Oil (LON:TLW) have jumped in London this morning as the Africa-focused oil explorer unveiled that it had returned to profit in the first six months of its financial year. The company further said that its multi-billion dollar TEN oil fields offshore Ghana are expected to start producing early next month.

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As of 09:32 BST, Tullow Oil’s share price had added 2.97 percent to stand at 204.80p, outperforming the mid-cap FTSE 250 index which is currently 0.38 percent better off at 17,133.36 points. The oil group’s shares have lost more than 12 percent of their value over the past year, but have recovered more than 23 percent in the year-to-date.
Tullow Oil announced in a statement this morning that it had made a profit before tax of $24 million (£18 million) in the first six months of the year, as compared with a pre-tax loss of $10 million (£7.6 million) in the prior-year period. The group, however, posted a 34-percent drop in first-half revenues to $541 million on account of lower commodity prices and reduced output from its flagship Jubilee project.

“The benefits of last year’s cost-cutting programme are evident in the financial results,” the group’s chief executive Aidan Heavey said in the statement, adding that the company was “well placed to move forward with a restructured and more efficient business”.
Heavey added that Tullow’s ‘transformational’ TEN project offshore Ghana was set to begin production next month, allowing the company to ramp up its net production and begin the process of deleveraging its balance sheet.
“Tullow is turning a corner, albeit with a few bumps on the way, but the share price drop below 200p has provided investors with an opportunity to buy stock in a portfolio that includes sizable stakes in world-class projects,” analysts at RBC Capital Markets commented, as quoted by Reuters.
Heavey, however, told the newswire that reinstating dividends was not a priority for Tullow, which scrapped its payout to shareholders in early 2015 due to the fall in oil prices.
As of 09:50 BST, Wednesday, 27 July, Tullow Oil plc share price is 204.50p.

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