Africa-focused Tullow Oil will return to paying dividends, which it suspended in 2015 due to the oil price crash, and expects to pay out at least $100 million from 2019 with an option for a special dividend for this year, it said.
Tullow forecast its net debt would drop to $2.8 billion by the end of the year and slightly raised its full-year free cash flow to $700 million earlier this month, helped by trimming its capital expenditure.
Tullow has around 1.39 billion outstanding shares, according to Refinitiv Eikon data, implying a dividend of at least around $0.07 per share.
“Having reached our target of being a balanced self-funding exploration and production business and having embedded cost discipline across the group, this is the right time to reinstate a dividend and focus on our plans for growth,” Chief Executive Paul McDade said in a statement on Thursday.
The dividend will be paid on a semi-annual basis based on the free cash flow Tullow makes while keeping debt and investment in mind, it said, adding the board will look at other types of returns to shareholders if cash abounds.
“With respect to the 2018 financial year, the board will review the potential for a one-off ordinary dividend after the year-end financial close,” Tullow said.
Tullow, with a market cap of around 2.5 billion pounds ($3.2 billion), had raised the possibility of returning to paying dividends in April.
Tullow plans to spend $570 million next year, at the upper end of its $200-$600 million capital expenditure range.
At a capital markets day, McDade told reporters plans for final investment decisions on its East African ventures in Uganda in the first half and Kenya at the end of next year still held.
He said the company was driving to complete a farm-down - or the sale of a share in its rights over a discovery - in Uganda to Total by the end of this year, but declined to put a probability on that timeframe.
As for the pipeline project in Kenya that would carry oil from onshore fields to the port of Lamu, he said if all commercial and ownership questions were settled by the third quarter of 2019, a final investment decision would still be possible by the end of that year.
Have your say
More Business Headlines
- Pressure on cedi backed by real demand by businesses – ACI
- GCIC entrepreneurs generate over $1 million in revenue
- Silver Star Auto unveils Mercedes-Benz ambulances in Ghana
- Local steel industry touted as backbone of Ghanaian economy
- Banking sector reforms: Fiscal and macroeconomic costs - 2
- Ghana drops five points on latest Consumer Confidence Index
- SME's exposed to cyber security threat – Expert warns
- UMB to support importers, exporters take advantage of int’l market
- IT Consortium becomes first FinTech in Ghana to be ISO 27001:2013 certified
- Chinese hackers are ramping up attacks on US companies
- Banking giant UBS fined more than $5 billion in fraud case
- GLICO LIFE insurance appreciates, rewards outstanding sales staff
- MTN faces more problems in Uganda as authorities query its sales figures
- WTO warns of global trade slowdown as indicator hits nine-year low
- Huawei commits to becoming a market leader in Ghana; unveils new Y7 Prime