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Investors’ risk averseness to exploration pushed share price down – Tullow Oil

tlTullow Oil has described the current fall in its share price on the Ghana Stock Exchange (GSE) which is below its initial public offer (IPO) as a reflection of investors risk averseness to exploration.

The oil giant in 2011 floated shares and listed on the Ghana stock exchange at a share price value of GHC 32 Ghana.

But its share price has hardly been sustained above its IPO. It currently is valued at GHC 31.90 pesewas.

The company spends about a billion dollars every year on exploration which is close to about half of its operational cost.

Head of Investor Relations and Communication, Chris Perry told Citi Business News, the fall in share price is not indicative of the company’s performance but the risk appetite of its investors.

“The market is being risk averse. it’s not prepared to invest in exploration. I think this is a short term phenomenon. It’s quite cyclical, so in the longer term we will see more people invest and pay up for exploration. Just hopeful that the market will turn at some point, it’s certainly the way the market is at the moment.”

He added that when investors begin to appreciate exploration, the price hopefully will go up.

Meanwhile, Tullow Oil has expressed its intention to offer a $500 million senior note that is expected to mature in 2020.

The debt instrument, whose net proceeds will be used to repay certain existing indebtedness under the Company’s credit facilities, will be the senior obligations of the Company and guaranteed Company’s subsidiaries.

Interest will be payable semi-annually. The interest rate, offering price and other terms will be determined at the time of pricing of the offering, subject to market conditions.

Chris Perry mentioned that the note will also enable his outfit diversify its current debt portfolio.

“We are issuing a $500 million bond. It will be used to pay down some of our current debt facilities, so it will enable us diversify our debt.”

Source: Citi fm

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