Tullow Oil lost 70% in a day — bad wells, overpromised production, and a CEO out

On 9 December 2019 Tullow Oil cut its production guidance again and announced the immediate departure of chief executive Paul McDade and exploration director Angus McCoss. Shares fell over 70% in a single day — the company's biggest daily loss since 2004.

The causes were technical. Tullow's flagship Jubilee field off Ghana had been plagued by production problems, a well at the neighbouring TEN field was delayed, and oil discovered in Guyana turned out to be of lesser quality than hoped. Output for 2019 had already been trimmed 14% to 87,000 barrels a day; the new guidance said 2020 would shrink further to at most 80,000 bpd and fall to around 70,000 bpd by 2021–2023.

The cuts landed on a balance sheet with no room for surprises: Tullow expected net debt of about $2.8 billion at the end of 2019, with $300 million of bonds maturing in 2021 and $650 million in 2022 — against a market value the crash left below a billion dollars. The dividend, reinstated only months earlier after a hiatus since 2015, was scrapped again.

The resignations were presented as a change of leadership to restore investor confidence, but the damage was structural. A mid-sized explorer had priced its shares on a pipeline of new fields and steady production growth; when the wells underdelivered, the entire investment case — growth, cash flow, even survival at its old size — unwound in one trading session.