Tullow Oil reinstates dividend after 'excellent' progress

Tullow Oil has announced plans to reintroduce its dividend, which was suspended in 2015, following "excellent" operational and financial progress over the past 18 months.

In an update ahead of its capital markets day, the company said it expects to pay out at least $100m from next year. It also said that it will look to supplement the ordinary dividend with additional returns to shareholders in periods of particularly strong free cash flow generation.

The dividend will be payable semi-annually, split between the interim and final dividend.

The company said that with respect to the 2018 financial year, the board will review the potential for a one-off ordinary dividend after the year-end financial close.

Chief executive officer Paul McDade said: "Having reached our target of being a balanced self-funding exploration and production business and having embedded cost discipline across the group, this is the right time to reinstate a dividend and focus on our plans for growth."

Tullow also said on Thursday that it has agreed with Discover Exploration to farm into Blocks 35, 36 and 37, offshore the Union of the Comoros in the Indian Ocean. Following the completion of this transaction, which requires government approval, the company will operate the three blocks and hold a working interest of 35%.

The blocks comprise an area of 16,063 sq km with a gross unrisked resource potential of up to 7 billion barrels of oil. A 3D seismic survey is planned for 2019.

At 0855 GMT, the shares were up 0.7% to 181.06p.