Tullow Oil's shares are tumbling yet again on the back of its £607m rights issue

Courtney Goldsmith
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Photo taken on September 17, 2011  shows
Tullow is struggling to grapple with lower oil prices (Source: Getty)

Shares in Tullow Oil dropped as much as 15 per cent this morning on the back of a £607m rights issue announced last month.

In March, Tullow proposed a 25 for 49 fully underwritten rights issue of 466,925,724 new ordinary shares, which has now completed as the new shares started trading today.

In morning trading, shares were down 11.6 per cent at 204.9p.

The company has slashed its capital expenditure over the years as it struggled to make a profit on lower oil prices. Brent crude is trading around $54 a barrel today, recovering somewhat from lows of around $50 a barrel in the past week.

The turnaround is proving difficult, however, as the company revealed huge write-offs in its African business, leading to a third consecutive annual loss in its most recent set of results.

Chief operating officer and chief executive officer-designate Paul McDade previously said the group's restructuring plan has allowed it to produce positive free cash flow and reduce debt.

McDade said the rights issue will allow the group to focus on growing the business by investing more across its portfolio and taking advantage of opportunities in the industry at present.

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