What will happen to the Premier Oil share price after the election?
The UK-based oil and gas company saw its share price plummet more than 70% on Monday after unveiling a devastating production update, with the stock likely to see increased volatility either side of the election?
Tullow Oil saw its shares tumble more than 70% after publishing a devastating production update on Monday which led to the company suspending its dividend.
Production at the company’s core sites in Ghana came in significantly below expectations, forcing Tullow Oil to lower its forward-looking guidance.
The company expects 2019 full year net production to average around 87,000 barrels of oil per day (bopd), with group production for 2020 forecast to average between 70,000 to 80,000 bopd.
Tullow Oil’s Executive Chair Dorothy Thompson admitted she was ‘disappointed by the performance’ of the business and that the company will complete a ‘thorough review of operations’.
‘We are taking decisive action to restore performance, reduce our cost base and deliver sustainable free cash flow,’ she added.
A full financial and operational update will be provided when it releases its full-year results on 12 February 2020, with an update on progress to be given in the group’s trading Statement on 15 January 2020.
Tullow Oil is trading at 46p a share as of 12:00 GMT on Tuesday.
Tullow Oil set for increased volatility around election
Tullow Oil looks set for a volatile period around the general election, with the company firmly positioned to react to sharp moves in the pound.
‘With Tullow earnings largely coming from Africa and South America, any appreciation in the pound would be detrimental to the value of Tullow income,’ Senior Market Analyst at IG Joshua Mahony said.
‘Thus, despite some seeing it as being counter-intuitive, there is a strong chance that Tullow would do best in a scenario such as a hung parliament which could drive the pound lower.’
‘Alternately, should we see a conservative majority, there is a strong chance that we will see share prices for internationalised firms like Tullow held back as their earnings are devalued,’ he added.
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