Shares in Tullow Oil rose as much as 10 per cent today as the company reduced debt and freed up cash despite a drop in profit in the first half.
The Africa-focused oil and gas firm announced a pre-tax loss of $519m (£398m) for the six months to the end of June compared with a profit of $24m the previous year, after it booked a $642m impairment due to low oil prices.
Revenue jumped 46 per cent to $788m, however, as it ramped working production up by 41 per cent to 82,400 barrels of oil equivalent per day.
The FTSE 250 firm reduced net debt by nearly $1bn to $3.8bn after the company raised $750m through a rights issue in April.
Shareholders appeared to be pleased with the company's progress as shares in the company rose 10.46 per cent to 164.13p in afternoon trading.
Why it's interesting
Tullow has been troubled by sliding crude prices, like all oil firms, but it has managed to position itself on a stabler footing financially over the first half of the year.
Nicholas Hyett, equity analyst at Hargreaves Lansdow said:
However, there’s still a long way to go before Tullow can be said to be in rude health. The debt pile is still substantial, and without the benefit of another rights issue it will take a long time to get down.
Brent crude prices jumped to $50 per barrel yesterday and have stabilised there today. Hyett added the company's oil hedges are "all but exhausted" and said another drop in prices would be painful.
What Tullow said
Paul McDade, chief executive of the company, said
Despite continued challenging market conditions, Tullow performed well in the first half of 2017 delivering strong revenues and organic free cash flow. Combined with the rights issue completed in April, this has allowed us to retain operational and financial flexibility and reduce our debt during the first half by around $1bn.
Since taking over as chief executive, I have appointed 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 our diverse portfolio of low-cost production, development and exploration assets.