An oil rig in Turkana. Tullow has had a series of success in its northern Kenya operations. PHOTO | FILE
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The UK oil explorer, which is listed on the London Stock Exchange, saw its share price drop to 418.90 pence from 464.9 pence from last Thursday’s price, a 10 per cent drop.
The share price’s gradual drop is attributed to fears that oil exploration firms could shelve further work due to the drop in the commodity’s price on the international market.
Tullow Oil’s share price continued its gradual drop even as the company said that it would scale down operations on sites where work is coming to an end.
The UK oil explorer, which is listed on the London Stock Exchange, saw its share price drop to 418.90 pence from 464.9 pence last Thursday, a 10 per cent drop.
The share price’s gradual drop is attributed to fears that oil exploration firms could shelve further work due to the drop in the commodity’s price on the international market.
Oil prices are edging at about $70 per barrel level which is below the $90 per barrel level that petroleum analysts say is the minimum price in the international market that is needed to sustain development locally.
Despite the gloomy prices there is still investor interest in Tullow as reported by Bloomberg which said that the oil and gas exploration firm was a possible takeover target.
Tullow has had a series of success in its northern Kenya operations having struck eight wells with positive finds out of the 11 it has drilled.
Tullow plans to open up more areas including the Kerio Basin which is expected to see some jobs lost in other areas it is operating at.
The Financial Times of London reported on Monday that some 1000 jobs would be lost in the company due to end of seismic survey or exploration .
“With the end of seismic surveys, Tullow expects to let go of about a third of its 3,000 employees and contractors, and it is not clear how impoverished local communities will respond after coming to rely on the oil industry for much-needed jobs and social services,” the FT reported.
The firm said that as work comes to an end on some sites it would naturally mean that locals in that area will lose their jobs but added that new openings will be created in the other areas where it will be drilling.
But Tullow Kenya management said on average it has between 2,000 and 2,500 workers on its payroll in any given month most of whom are on contracts.
“As specific activities end, contractors reduce their staff numbers accordingly to reflect this reduced activity. Tullow’s exploration and appraisal activities are scaling down in the Lokichar basin and moving north, in line with our drilling programme, hence work associated with this phase is also coming to an end. This is not an unusual occurrence and this happened previously when seismic activities finished,” Tullow management told the Business Daily.
The firm also faced an increase in usage fees charged by the Turkana County government over the last two years.
Usage fees stands at Sh198,000 per acre from Sh8,900 which is going to be reviewed, leaving the firm in limbo.
“In 2014, the Turkana County Government indicated that the County would revise its per acre lease fees and we await the outcome of these revisions,” said Tullow.
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