Tullow Oil founder bows out after swing to first-half profit

Tullow Oil turned in a profit from the first half of its trading year, a considerable turnaround from the loss of $557.9m reported in the same period a year earlier.

The independent oil and gas company recorded a profit of $150.5m from the six months ended 30 June as revenue for the first half rose 15% to $905.1m on the back of the stronger oil price and a small increase in production.

"Today's results are further evidence of the progress that Tullow has made in the first half of 2018," said Tullow's chief executive Paul McDade.

Tullow, which is principally focused on production and exploration in Africa, reported a free cash flow of $401m, helping trim its sizeable pile of debt fell from $3.8bn at 1 January to a net $3bn as of 30 June.

The company warned that its working interest production had fallen 4% to 79,100 barrels of oil equivalent a day but upped its full year guidance to 86-92,000 bopd from 82-90,000 bopd as it maintained its capital expenditure guidance for the year at $460m.

Over the next two years, McDade aims to increase production from current assets in West Africa, progress two large onshore developments in East Africa and step up the search for material new oil fields in Africa and South America through a multi-year exploration campaign initially focused on Namibia and Guyana.

Tullow also revealed that chairman and founder Aidan Heavey would be stepping down from the company after 32 years to be replaced by Dorothy Thompson, who was appointed an independent non-executive director back in April.

McDade said that Heavey had been a "pioneer and an inspiration" across Africa for decades, especially in Ghana, Uganda and Kenya.

As of 0900 BST, Tullow shares had moved ahead 2.58% to 222.60p.

“Things were touch and go a couple of years ago, but Tullow is now firmly back on the right track," said analyst Nicholas Hyett at Hargreaves Lansdown.

"Net debt’s still a bit higher than we’d like, meaning it’s very exposed to a reversal in oil prices, but the debt pile is falling rapidly and with the huge Ghanaian field producing tens of thousands of barrels of oil a day, there’s plenty of cash flow to service it.

"The group’s taking the opportunity to invest in new projects, and progress in the East African portfolio looks promising. The need to replace existing reserves is the monkey on the back of all oil groups, and Tullow probably spent less than it would like over the last few years. We wouldn’t be surprised if capital expenditure were to climb from here, and combined with the need to reduce debt that could restrict returns to shareholders in the medium term."