TULLOW OIL PLC: GHANA'S EMERGING BLUE CHIP?

Tullow Oil Plc is one of those listed companies very rarely traded in Ghana's admittedly still young stock exchange but there seems to be good reason: It is an emerging blue chip.

According to full year figures to December 2018 released this week, it has so much ahead of it that it will be foolhardy to offload any portion held.

From the figures and information released as notes to the figures, Tullow Oil barely scratched the surface of its potentials in 2018 year, yet it ended with leap in profit before tax from 2017's $22m to $523m.

This was essentially as impairment provision slumped from $539m in 2017 to just $18m; restructuring cost dived to $3m from $15m; while disposal profit came to $21m from 2017's $2m loss.

Also positive was the fact that administration cost dropped by only 5.26% to $90m while total revenue generated grew by 7.9% to $1859m from $1723m 

Hence, in 2018 year, Tullow oil recorded solid 28.4% profit margin compared to only 1.28% in 2017 year.

It was not all rosy though with cost control because exploration cost rose by 106.3% to $295m and provisions for service contract liability rose to $167m but the arrow points not just to how well 2018 ended but more importantly was is in store for the future.

Tullow, according to available information, is not only hoping to increase crude oil production in Ghana, but is also drilling for oil in Uganda and eyeing hopeful activities in Latin America.

On its radar are wells to be drilled or already drilled in Cote d'Ivoire, Namibia, Zambia, Guyana, Peru  and Jamaica.

Indeed, so hopeful about the future, the board of directors committed itself to corporate returns policy that will tie dividend payment to free cash generated every year.

For 2018 year, they are tecommending GHs 48 per share payable by May 2019 with the hope of keeping total dividend paid yearly above $100m through interim and final dividends.

TULLOW OIL PLC $m full year.
                              2018.         2017
Total Revenue.   1859.         1723
Other income      (188).        (162)
Gross profit.       1082.           815
Administration.      90               95
Restructuring.          3.               15
Disposal gain         21.             (2)
Exploration cost 295             143
Impairment.          18.             539
Other provision  (167).              1
Profit before tax 528.              22
Profit margin %. 28.4.           1.28

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