The decision by the company, which is listed on three bourses, including the Ghana Stock Exchange (GSE), to retain dividend followed a US$597.3 million net loss posted in the 2016 financial year.

The loss was a 42 per cent improvement over the US$1.04 billion loss posted in the 2015 fiscal year.

In its full year financial statement released on February 8, the company said financial constraints in preceding years had made it necessary for the company to retain rather than declare and pay dividend.

“At a time when Tullow is focusing on capital allocation, financial flexibility and cost reductions, the board believes that Tullow and its shareholders are better served by retaining funds in the business,” the company said in the report.

Ms Akua Twumasi of Tullow Ghana’s Communications Directorate in an interview on February 9 said the retained dividends would be channeled into its exploration works, in the case of Ghana.

“It was recommended that the money be put in the business and that will serve a better purpose than giving it out.”

“We have already taken the money and that is what helped the business to run. We need to put money into the business every day for production to continue,” she said.

In 2015, prices of crude oil fell by about 50 per cent, prompting E&P companies like Tullow, which operates the Jubilee Field and Tweneboa-Enyenra-Ntoumme (TEN) in Ghana, to restructure their operations in other to remain viable.

Although remnants of the price fall have since abated, they are felt across their operations, reflecting in the US$597.3 million net loss posted in the 2016 financial year.

Financial risks

The company has identified that principal financial risks and uncertainties for 2017 include the oil price and overall market volatility, operational performance and project delivery, maintaining capital and operating cost discipline and the execution of financial strategy to maintain appropriate liquidity.

In view of this, the company said it intended to closely monitor cash flow projections and would subsequently take mitigating actions in advance to maintain its liquidity and to fulfill the group’s objective to reduce net debt.

“Actions available to the group include additional funding options, further rationalisation of our cost base, including cuts to discretionary capital expenditure and portfolio management,” the report said.

Biggest highlight

First oil from the Tweneboa- Enyera- Ntomme (TEN) fields, Tullow’s second major operated deep water development project in Ghana was delivered in August 2016.

The report said net capital expenditure by Tullow on the project was approximately US$600 million, in line with the Group’s forecast.

It explained that the project remained on schedule and on budget throughout the development phase. “Again, in early January 2017, the capacity of the FPSO was successfully tested at an average rate in excess of the design capacity of 80,000 bopd during a 24 hour flow test,” it added.

The outgoing Chief Executive of Tullow Oil, Mr Aidan Heavey explained that the highlight of Tullow’s operations in 2016 were the coming on stream of the TEN fields on time and within budget.

“The clear highlight of 2016 was delivering Ghana’s second major oil and gas development, the TEN fields, on time and on budget.”

“Production from TEN, alongside our other West African oil production, has provided Tullow with positive free cash flow and enabled us to begin the important process of deleveraging our balance sheet,” he said.

He further explained that, “as we focus our free cash flow primarily on reducing our debt, capital discipline remains critical.”

“We have made excellent progress with our East African developments and are building a high quality exploration portfolio to grow our business. As I move to become Chairman of the Group and hand over to Paul McDade, Tullow has the right assets and expertise to take full advantage of the opportunities ahead.”