Tullow Oil has given a "confident" update ahead of its annual general meeting today

Courtney Goldsmith
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The Africa-focused miner reduced its debt by $200m in the first quarter (Source: Getty)

Tullow Oil cut its debt by $200m in the first quarter while production hit the top end of expectations.

The Africa-focused company, which has its annual general meeting (AGM) today, said production averaged 85,700 barrels of oil per day (bpd) in the first quarter of 2017. It maintained current guidance of 78,000 to 85,000 bpd for the year.

Yesterday, Tullow announced it successfully raised $750m (£585m) in a rights issue. At the end of March, net debt stood at $4.6bn, $200m lower than its level of debt at the end of 2016, and Tullow said it has headroom and free cash of $1.2bn prior to the receipt of rights issue proceeds.

The firm is taking advantage of the industry's current low cost environment to carry out seismic surveys in Jamaica and Uruguay, with further surveys planned for May.

Al Stanton, analyst at RBC Capital Markets, said Tullow gave a "confident update that should comfort Tullow shareholders".

Founder and chief executive Aidan Heavey said: "This has been an exceptionally busy few months for Tullow as we agreed to farm down our assets to our partners in Uganda, made substantial changes to our board and launched a $750m rights issue."

Heavey said he is confident Tullow will prosper in 2017 and beyond when he hands over his role as the company's boss to Paul McDade.

Yesterday, Royal London Asset Management (RLAM), which owns 0.95 per cent of shares in the company, said the move to promote Heavey to the role of chairman is "a clear violation of an important corporate governance principle, designed to protect shareholders and ensure effective independent oversight of the company’s management".

Ashley Hamilton Claxton, corporate governance manager at RLAM, said the shareholder would oppose the appointment at the company's AGM today.

Tullow said the "unique nature" of the company's business and relationships across Africa necessitate a "phased" transition in the leadership. It said Heavey's tenure as chairman will not exceed two years.

Read more: Tullow Oil shares plunge after it reports another year of losses

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