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Tullow Oil told shareholders that it would reinstate its dividend on Thursday, which sends a strong signal that the London-listed oil and gas company is on the road to recovery after suffering several setbacks over the last four years.
The FTSE 250 company said that after ‘significant progress’ the board has opted to establish a capital returns policy that will kick off in the new year, with business looking to pay out around $100 million on a semi-annual basis.
‘Tullow has made excellent operational and financial progress over the past 18 months,’ Tullow Oil CEO Paul McDade said.
‘Having reached our target of being a balanced self-funding Exploration and Production business and having embedded cost discipline across the Group, this is the right time to reinstate a dividend and focus on our plans for growth,’ he added.
Tullow Oil creates platform for growth
The oil and gas company is showing signs of recovery after what has been a tough few years, with the business managing to reduce its debt, improve free cash flow and deepen its presence in emerging markets, particularly in Africa.
In West Africa, the company has several low-cost resources that it is looking to develop in Ghana, Gabon, Equatorial Guinea and the Ivory Coast. Meanwhile, in East Africa, Tullow Oil has a couple of large-scale projects in Uganda and Kenya that could see the group’s production increase by 50%.
The oil and gas company also has built a strong presence in South America too, where it is hoping to unlock prospects in proven hydrocarbon basins in the next few years.
Putting the past behind it
Tullow Oil was hurt by the oil price crash that occurred in 2014, with the company forced to take on a lot of debt in a bid to stay afloat and move forward with several projects that it had greenlit ahead of crude’s fall from grace.
After a very tough few years, the company has finally returned to profit and its balance sheet is so strong that the business has opted to cancel its undrawn revolving credit facility worth $350 million.
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