Tullow Oil's founder Aidan Heavey will step down as chief executive in April to become chairman for up to two years as the exploration group undergoes a change in leadership.
Chief operating officer Paul McDade will succeed Mr Heavey, who has been chief executive for more than three decades, the company said on Wednesday.
"The board and I have long been aware of the need to plan carefully for Aidan's retirement from Tullow as our founder and after 31 years as CEO," said Simon Thompson, chairman, who will step down from the board in April.
Speaking to The Irish Times, Mr Heavey (63) acknowledged that while it runs counter to UK corporate governance guidelines for a CEO to become a non-executive chairman, the company consulted major shareholders and concluded it was the best way to manage the transition.
“About 10 per cent of companies in the FTSE 250 have chairmen who have moved up from being CEO,” Mr Heavey said. “Tullow is very much a relationship business. Some, especially the African shareholders, made it clear they didn’t want me retiring. I think it’s been pretty well handled.”
The announcement comes as the group’s immediate focus is on lowering its debt burden and returning to growth, following a recent rebound in crude oil prices.
Refinancing
A Tullow Oil trading update published Wednesday said its net debt at the end of 2016 was $4.8 billion (€4.5 billion). It is preparing to start talks before Mr Heavey steps down on refinancing over $3 billion of bank facilities.
Tullow expects to deliver gross profit of $500 million in its upcoming full-year results for 2016 on $1.3 billion of revenue.
Earlier this week, Tullow revealed it has agreed to sell a 21.6 per cent stake in the so-called Lake Albert Development Project in Uganda to French group Total for a total consideration of $900 million, mostly comprised of deferred payments. Tullow will retain a 11.8 per cent interest.
Last year saw Tullow's TEN project off Ghana begin to pump crude. However, its flagship Jubilee field, also off Ghana, suffered technical issues on its floating production, storage and off-loading vessel during the year.
Tullow said that remediation on the issue, affecting a turret bearing, is progressing and insurance payments for the costs continue to be received.
Davy analyst Caren Crawley said Tullow's forecast that production from TEN will be about 50,000 barrels of oil per day this year is below the stockbroker's estimate of 64,000 barrels. Other analysts have also been disappointed by the forecast.
Shares in Tullow Oil fell as much as 4.1 per cent to £3.096 in London.
