Heavey claims Tullow has $1 billion to spend

Mark Paul, Business Affairs Correspondent

Aidan Heavey, the chief executive of Tullow Oil, says the company has spare financial resources of $1 billion to deploy on acquisitions and for other uses this year, if required.

Speaking ahead of a shareholder’s meeting in Dublin on Friday, Mr Heavey said Tullow is not considering buying any other companies, but it expects to bid on new exploration licences to be offered by several African governments.

It also may seek out "specific assets" in Africa, although he declined to give further details. Tullow has major operations in Ghana, Uganda and Kenya.

Mr Heavey said it is assessing potential licence bids in areas adjacent to where it currently operates, and also in new territories.

“We have always been aggressive in chasing acquisitions in downturns,” said Mr Heavey. “We hope to complete some deals this year. It is a buyers market. We get licences because of the reputation of our company.”

With the current depression of oil company share prices caused by the collapse in oil prices, Tullow is seen as a potential takeover target by an oil major because of its vast African oil reserves.

Mr Heavey said that Tullow has not received any outside approaches from representatives of companies that might be assessing a bid for the company. He said Tullow is not for sale.

When asked if the company had taken any steps to try to make itself less attractive to any potential hostile bidders, Mr Heavey said “poison pills are a thing of the past. We don’t do that sort of thing.”

He insisted its close relationships with several African governments, who could potentially be required to approve a transfer of its assets to a buyer, are a major factor in dispelling any suitors.

“Tullow is incredibly important for Africa. We are their champion. They would be horrified at the thought of losing us,” said Mr Heavey.

He dismissed a suggestion that Chinese companies, many of whom are already heavily invested in African resources exploration, could also count on close relationships with African governments.

CNOOC, the China National Offshore Oil Company, is regularly touted as a potential bidder for Tullow.

“The Chinese are only in Africa for one reason [to acquire access to minerals]. We are seen [by African governemnts] as a long-term partner.”

Mr Heavey also said he was “concerned” about the medium to long-term price of oil, because of a current fall-off in fresh exploration investment across the industry. With oil prices at a low level, companies are finding it difficult to finance fresh drilling. Mr Heavey said this would lead to shortages in future.

“I think it is going to lead to big spikes in oil prices down the line,” he said.