Business Irish

Monday 18 December 2017

Tullow shares soar amid rumours of Statoil takeover

Tullow oil is headed by founder, Aidan heavey. Photo: Mark Condren
Tullow oil is headed by founder, Aidan heavey. Photo: Mark Condren
Willie Walsh: CEO, IAG
Dr Tony Ryan
John Mulligan

John Mulligan

Shares in Irish-founded exploration firm Tullow Oil surged in London yesterday amid speculation that Norway's Statoil could be interested in buying the company.

Tullow, which was founded by and is headed by chief executive Aidan Heavey, jumped 7.4pc in London to £9.09, giving the company a market capitalisation of £8.2bn (€9.9bn).

The stock had closed up 3.1pc on Thursday as rumours surfaced that Statoil had run the rule over Tullow, which Mr Heavey founded in 1985. On Wednesday, shares in Tullow had been trading at a five-year low.

Tullow, which focuses its exploration activity in Africa, has been a major success for Mr Heavey, the Roscommon native who was out playing a round of golf when a conversation with his playing partner spurred him to get involved in the oil business. An accountant, he was working with an Aer Lingus subsidiary before he later established Tullow and began targeting the acquisition of small oil fields in west Africa.

Mr Heavey owns 6.4 million shares in Tullow, currently worth more than €70m, and has options on shares worth more than €10m. That means Mr Heavey would be in line for a payout of around €100m.

In the first half of 2013, Tullow generated revenue of $1.3bn (€951m) and a pre-tax profit of $313m (€229m).

It produced the equivalent of 88,600 barrels of oil a day in the first half of 2013.

ASSETS

Its major assets include the Jubilee field in Ghana, while it also has successful producing fields in Kenya and Uganda.

It has a total of 68 producing fields and operates in 25 countries, including a presence in Norway. It incurred $2bn (€1.4bn) in capital expenditure last year.

While the shares have also risen this week on the back of positive analyst ratings, it's the possible interest of Statoil in the company that has spurred the real jump in the stock.

Tullow has had significant success in finding and developing productive wells, but its shares had declined of late amid a number of dry wells.

But in an interim management statement last November, Tullow said that it has a number of "material well results" due in the coming months.

It said it remained confident of adding the equivalent of 200 million barrels of oil to its resources in 2013, as it has averaged on an annual basis since 2006.

"Our high-impact, basin opening exploration campaigns will continue in 2014, and with wells in Kenya, Mauritania, Norway, Ethiopia and Guinea planned for the first half, there is much to look forward to," it said.

Norway's state-controlled Statoil , which hasn't yet commented on the Tullow rumours, is the world's eleventh biggest oil company. The Norwegian government owns 67pc of Statoil, which has helped the country to develop the world's largest sovereign wealth fund, worth $932bn (€682bn).

Aer Lingus: unlikely incubator for business talent

It is not often that semi-state companies become the breeding ground for entrepreneurs and go-getters. But Aer Lingus has had more than its fair share of employees who went on to have enormous success outside the airline. As one union official said a couple of years ago: "When it comes to Aer Lingus the cream rarely rose to the top and our brightest stars had to go elsewhere."

Aidan Heavey, who was an accountant at its former Blueskies Holidays subsidiary, is one of a group of former workers at the group who have excelled outside it. Others include:

1 Tony Ryan: Co-founder Ryanair and founder GPA: the late Tony Ryan spent about 20 years working for Aer Lingus from 1955, joining as a member of its Shannon ground staff. He went on to work on the operations side for the airline in the United States, where he evolved into a hard-nosed executive. He left, setting up aircraft leasing firm Guinness Peat Aviation in 1975 and later Ryanair, making a fortune for himself and his family.

2 Willie Walsh: CEO, IAG: he joined Aer Lingus almost by accident, signing up for a pilot cadetship in 1979 when he was 17. A little more than a decade later he was a captain, and spent six years as a negotiator for the pilots' union. He went on to become chief executive and left the airline in 2004. He was appointed CEO of British Airways and now heads the enlarged group that includes BA and Spain's Iberia.

3 Alan Joyce, CEO Qantas: the Dublin native studied at TCD and joined Aer Lingus in the 1980s, aged 22, engaged in operations research and then fleet planning. He had applied to become a pilot but failed the eyesight test. By 1996, he was headhunted to run the now defunct Australian airline, Ansett. In 2003, he went on to run JetStar, the low-cost subsidiary owned by Qantas. He took over as its CEO in 2008.

4 Conor McCarthy, MD, Dublin Aerospace: he worked alongside Alan Joyce at Aer Lingus and at one stage was the chief executive of the airline's Aer Lingus Commuter division. He then joined Ryanair, serving as its director of group operations between 1996 and 2000. In 2001, he set up his own consultancy and helped launch low-cost airlines around the world, including JetStar and Malaysia-based AirAsia. He established aircraft maintenance firm Dublin Aerospace in 2009.

Other leading business figures who once worked for Aer Lingus include former Kerry Group CEO Hugh Friel; its former chief financial officer, Brian Dunne, who went on to be finance boss at the aviation group that included Air Canada; and Seamus Kearney, the boss at food group Valeo, who was previously the chief operations officer at Aer Lingus

Irish Independent

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