As oil and gas business Tullow Oil (TLW) flagged material uncertainty about its ability to continue as a going concern in its full year results an already bombed out share price fell a further 12% to 15.9p.
Revenue was down in 2019 at $1.6bn, compared with $1.8bn the year before. The group also reported a loss after tax of $1.6bn in its full year results ended December 31, 2019. The loss after tax was driven by exploration write-offs and impairments totalling $2bn.
According to the results statement, the company generated free cash flow of $355 million, had year-end net debt of $2.8bn and a net debt to earnings ratio of two times.
The company has announced plans to cut costs, reiterated the suspension of the dividend and announced plans to lower 2020 capital expenditure to $350m. The plan is also sell $1bn worth of assets.
The latest oil price crash is just the latest in a series of setbacks for the business which once was an established constituent of the FTSE 100.
AJ Bell investment director Russ Mould says: ‘A $750m rights issue carried out three years ago ultimately proved insufficient to fully shore up the balance sheet and this latest slump in the oil price has raised serious questions about its ability to continue as a going concern, as the company itself acknowledges.
‘Jobs are being cut, spending is being reined in and the company hopes to raise $1bn through asset sales. However, it will be selling projects at a time when oil prices are significantly depressed and will be working from a very weak negotiating position, so this total could prove overly ambitious.’
Cantor Fitzgerald euphemistically describe the year as ‘eventful’ adding that significantly larger than guided hit to the P&L likely to overshadow cost-cutting measures.
