Tullow Oil looks set to shut its Dublin office, with the loss of 55 jobs as part of a major global restructuring by the oil and gas explorer.
Staff numbers in Ireland are already well down on the 140 who worked here five years ago, but the move would sever ties with Tullow’s country of origin. The company was founded here in 1985 by Aidan Heavey and first listed on the Irish Stock Exchange. Staff at the Irish office are now mainly geology and technical specialists working on exploration prospects - an area the company is pulling back from as it seeks to maximise the return on existing assets.
The company is Ireland’s most successful oil venture ever, it was valued at as much as $14bn in its heyday, but the market capitalisation stood at around $900m this week while its debt pile was around $2.8bn at the end of 2019.
Tullow’s output this year is expected to shrink to 75,000 barrels per day this year and to 70,000 bpd from 2021. That’s down from 87,000 a day - and production for the following three years will hover around the bottom of that range.
In the past year, technical difficulties have hampered output in Ghana, while projects in Uganda and Kenya have faced delays, and results from wells in Guyana missed expectations.
It is not in immediate danger from its borrowings, but it will have to navigate a way to pay down medium-term debt maturing in 2021 and 2022.
The company’s latest plan is to cut a third of staff in a bid to slash administrative costs by a fifth, or around $20m.
The move would shrink Tullow, which industry sources told Reuters is looking to sell its Kenya projects once vaunted as a growth engine for the group, to a workforce of around 650 people and come alongside pay and hiring freezes, the source said.
Tullow confirmed a consultation process, which precedes any job cuts, had begun.
“Tullow estimates that the measures will deliver considerable savings and the group’s workforce may reduce by approximately a third globally with potential office closures in Dublin and Cape Town among a number of measures to reduce costs and overheads,” the spokesman said.
The Cape Town as well as Dublin office is focused on exploration, an area where Tullow is halving its spending to around $75m. It is also cancelling its $100m dividend plans.
Across the group, senior management jobs also face cuts of around a third, the source added.
Tullow has yet to announce a new chief executive after the surprise resignation of Paul McDade in December.
Tullow’s share price plummeted 64pc last year. It targets free cash flow of $150 million this year at an oil price of $60 a barrel LCoc1.
Tullow has pushed back its full-year results to March 12, when further details of its restructuring are expected. Executive Chair Dorothy Thompson has said the announcement of a new CEO might come after that date.
(Additional reporting Reuters)