Basic and diluted earnings per share are negative for Tullow Oil (LSE: TLW) the beleaguered FTSE 250 oil and gas exploration and production group.
A pre-tax loss of $500 million certainly doesn’t help.
A $750 million rights issue in April 2017 reduced net debt by about $1 billion give or take but the balance sheet still looks weak with total liabilities at $7 billion and current assets standing at $2.3 billion.
A significant proportion of Tullow’s non-current assets are made up of ‘intangible exploration and
evaluation assets’ and PPE.
A quick back of the fag packet balance sheet intrinsic valuation of Tullow Oil reduces intangibles and PPE by two thirds and takes the remainder of the assets at full value leaving an asset value of $5.3 billion.
When total liabilities equate to $7 billion it is no wonder management are spending a significant amount of resources – shareholder resources – on the reduction of debt.
The full year pre-tax loss up to 31 December 2016 was a whopping $900 million and has been negative for three years in a row.
The one ray of hope for shareholders from CEO Paul McDade is his appointment of a ‘new and highly experienced Executive team who are focused on returning Tullow to growth through financial discipline, efficient use of capital and by delivering on the potential of a diverse portfolio of low-cost production, development and exploration assets.’
A slight uptick in half year revenue leaves little else for investors to go on.
The share price is on trend to reach 2016 lows of 110p so for now the stock is a pass.