London Markets: Tullow Oil sinks in otherwise-flat London markets as election wait begins

This post was originally published on this site

Tullow Oil shares lost more than half their value on Monday, after the oil and gas company cut guidance and its chief executive resigned, in otherwise-sluggish London markets.

The FTSE 100 index UKX, -0.11%  slipped 0.2% to 7,225.56, weighed down as the British pound continued to rise. The pound GBPUSD, +0.0989%  gained 0.2% to $1.3169, as a weekend poll from the Financial Times showed a 10 percentage-point lead for the ruling Conservative Party over the Labour Party ahead of the Dec. 12 general election.

A strong pound tends to be negative for U.K.-based multinationals — many of which are listed on the FTSE 100 — that generate most of their revenue outside the country.

Tullow TLW, -66.34%  shares slid 60% after the company said 2019 output fell significantly below expectations, suspended its dividend and said Chief Executive Paul McDade had resigned with immediate effect.

“The news represents a continuation of the problems which have dogged the company ever since its share price peaked more than seven years ago,” said Russ Mould, investment director at broker AJ Bell, in a note to clients.

“The appetite for risk which served it well when exploring for oil and gas arguably left it in a perilous position when it had too much debt heading into the oil-price crash in 2014. Despite efforts to reduce borrowings, this remains an issue for the company, with net debt totaling nearly $3 billion,” he added.

Leading the gainers were shares in grocer Tesco TSCO, +4.69%, which confirmed speculation that it had begun a review of the strategic options for its businesses in Thailand and Malaysia, including an evaluation of a possible sale of these businesses. Shares rose nearly 5%.

Just Eat shares JE, +0.54%  rose 0.6% after Prosus, a spinoff of South African consumer internet group Naspers NPN, -0.68%, lifted its offer for the U.K. online food-delivery company to £5.1 billion pounds ($6.70 billion), stepping up a bidding fight for Just Eat with Takeaway.com TKWY, -1.62%.

Add Comment