Tullow CEO Heavey Steps Down After Building African Oil Explorerby
COO Paul McDade to be appointed CEO after AGM in April
Heavey to serve as chairman for two years before retiring
Aidan Heavey, an Irish accountant who spent three decades building Tullow Oil Plc into one of the world’s leading independent oil explorers, is stepping down as chief executive officer.
Heavey, 63, who founded the company in 1986 in Tullow, a town 35 miles south of Dublin, will work as chairman for no more than two years, before retiring, the company said Wednesday. Paul McDade, Tullow’s chief operating officer for the past 12 years, will take over as CEO after the annual general meeting on April 26.
“The first deal I did with Aidan was in 1990 when I was at ARCO and Tullow was just a startup,” Amjad Bseisu, CEO at North Sea explorer and producer EnQuest Plc, said in an e-mail. “His persistent vision and drive has made Tullow what it is today.”
Under Heavey, Tullow’s market capitalization reached almost 14 billion pounds ($17 billion) five years ago amid a commodities boom, before collapsing to 1.5 billion pounds as a slump in oil prices forced the industry to slash costs and shelve projects. Tullow rebounded 89 percent last year, making it the best performer on the 20-member Stoxx Europe 600 Oil and Gas Index.
“When this cycle started, I said I’d stay with the company and see it through the downturn and we’re out of that now,” Heavey said in a phone interview on Wednesday. “For me, the most important thing is to have the right person take over.”
The lack of industry investment over the past three to four years is reflected in the way oil majors are “scrambling” to buy assets now, Heavey said. Earlier this week, France’s Total SA announced it will pay Tullow $900 million for control of a Ugandan oil project.
Tullow has pioneered developments across Africa. Its flagship Jubilee project, off the coast of Ghana, produced 73,700 barrels a day last year, and achieving first oil in 2010 at the field was Heavey’s “most memorable” moment.
“For a small oil company, to bring that major field on-stream and celebrate with a whole nation” was a “very emotional time,” he said.
Last year, the company pumped the first oil from the Tweneboa-Enyenra-Ntomme project, known as TEN, also off Ghana. The start of the $4.9 billion development came after oil prices fell by more than half since the middle of 2014 amid a supply glut.
TEN’s production should come in at 50,000 barrels a day this year, of which 23,600 barrels will be Tullow’s, the company said on Wednesday. That forecast -- below analysts’ estimates -- sent Tullow shares down 3.2 percent to 312.50 pence as of 11:07 a.m. in London trading.
Investors shouldn’t expect any “dramatic changes” in Tullow’s strategy, incoming CEO McDade said in a phone interview. “The hard work we’ve done over the last couple of years has put the company in such a good position, given the external environment.”
The appointment of McDade is in line with expectations, according James Hosie, an analyst at Barclays Plc. “As COO he has overseen the company’s two operated deep-water developments, Jubilee and TEN, and already has a high profile among equity investors,” he said in a note.
As he prepares to step down, Heavey has one piece of advice for his successor.
“No challenge is insurmountable; if you have the right people and you sit down and you look at any challenge, you can deal with it,” he said. “The whole thing is never panic, have a cup of tea, relax and put the right teams in place.”