European Oil in ‘Doldrums’ Needs Discovery, Tullow CEO Says

European exploration and production companies need a major discovery or acquisitions “to ignite” investor interest in the flagging industry, Tullow Oil Plc (TLW) Chief Executive Officer Aidan Heavey said.

“It’s been two years now in the doldrums, which is a long time,” Heavey said today in a phone interview. “The market here needs something to get it excited. It’s just kind of bored, there has been no real activity.”

The FTSE AIM Oil and Gas Index, which has 113 European explorers, fell about 28 percent in the last 18 months after some investors switched focus to U.S. petroleum companies. The SIG Oil Exploration & Production Index, with 21 North American members, was little changed in the period.

“It’s really a European thing, because it has picked up quite a lot in the U.S.,” where exploration companies “are trading at significant premiums,” Heavey said. “It will take something to ignite it and to get the interest back.”

Glencore Xstrata Plc’s $1.35 billion acquisition of Caracal Energy Inc., a driller in Chad, and Qatar’s Al Mirqab Capital SPC’s offer to buy Heritage Oil Plc for $1.5 billion along with some other deals in April and May encouraged some industry analysts, including Anish Kapadia from Tudor Pickering Holt & Co., to report investor interest in the European oil industry is reviving. Yet, investor sentiment hasn’t changed much, according to Premier Oil Plc CEO Tony Durrant.

There “is still skepticism, still some reluctance to reinvest cash” in Europe’s explorers, Durrant said in an interview at his office in London earlier this month. “There are some green shoots in investor sentiment. We can see some evidence that North American investors” started “to get a little worried about” valuations, he said.

“It will be nice to think that some of that money is recycled into” the European explorers, Durrant said.

To contact the reporter on this story: Eduard Gismatullin in London at

To contact the editors responsible for this story: Will Kennedy at Indranil Ghosh, Alex Devine

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