Latest blow caps collapse of Tullow Oil shares at 80%
Tullow Oil shares fell further after it hit a dud oil find, this time in Peru, extending a losing streak that has seen its shares collapse by more than 80% in the last three months.
The once high-flying oil giant was hit in January when it revealed a recent oil find, in Guyana, was smaller than expected.
That news came shortly after another meltdown in its shares when the company cut its long-term production outlook, downgraded by almost a third of its projection of reserves in its flagship Ghana offshore well, suspended dividend payments, and parted company with its chief executive and exploration director.
The latest blow is the news it will abandon its Marina-1 well in offshore Peru after drilling found no oil.
The Irish-founded company’s shares trade in London and have lost more than 80% of their value since November. They fell more than 3% on the news from Peru.
The Marina well is located in 350 metres of water and was the first well to target deepwater plays in the Tumbes Basin.
“Tullow is building an extensive exploration position in Peru and, while this result is not what we had hoped for, we remain positive about Peru’s wider offshore exploration potential,” Tullow chief operating officer Mark MacFarlane said.
Analysts at Peel Hunt said the Marina-1 well was a relatively important well for Tullow, as it accounted for one-third of the company’s exploration budget and half of its wildcat drilling programme.
“There is significant work to be done if a successful well is to be drilled in Peru,” the broker said.
Tullow holds a 35% interest in the well, while Australia’s Karoon Energy holds a 40% operating equity interest through a subsidiary, and Pitkin Petroleum owns the remaining 25%.
Last month, Tullow tanked as much as 16% in the single day after it took a €1.3bn financial hit to its 2019 figures.
And earlier in January, Tullow shares had also crashed after its latest oil find, in Guyana, was smaller than expected.
Its output this year is forecast at 70,000 to 80,000 barrels a day and production for the next three years will likely hover around the bottom of that range.
