When Tullow Oil's staff around the world were given the opportunity to submit questions for an interview with Chief Executive Officer, Aidan Heavey, the company had an excellent response. The full interview was published on the Group's Intranet. I am posting an abstracted version of that interview below. Please read on:
1. What is the most challenging thing about running Tullow?
Heavey: We have been incredibly successful which can sometimes lead people to have high expectations. If you have a flat year, some people may be disappointed. The most challenging thing for us is therefore to keep delivering the right level of growth, whilst integrating our growing body of people in the right way to maintain our culture.
Q2. What would you be doing if you weren't CEO of Tullow?
Heavey: I think that because I am a builder, I would have created another company. When I was a child I loved Meccano, I have an eight year old that loves Lego, mad about building, some people are builders, and I am a builder!
Q3. What was the first car you ever bought yourself?
Heavey: Mini Cooper!!
General Questions
Q4. Are you able to talk about whether we are eyeing up new exploration blocks?
Heavey: Well, we are looking at lots of areas, obviously we can't give specifics, we have the best exploration team in the business and they are constantly looking to add new acreage and reviewing opportunities. If we announced the blocks we were looking at, the competition would suddenly be interested.
Q5. Does Tullow have a career progression schedule to encourage younger employees to climb the ladder?
Heavey: Yes - we have a framework which we are developing. This consists of programmes to continually up-skill our people in technical and managerial career paths; these are managed on a country basis, through the HR team and working with the respective function.
Q6. When you retire - what would you like your legacy to be?
Heavey: I don't know, it's too far away to think about. If I have to give an answer, I would like to think that Tullow would be the biggest E&P business on the planet!
Q7. I feel that our structure should become more asset and project based as we grow. We need to become more integrated; tools and project structure. Do you see the need to change in this way, with the investment that is required to do this?
Heavey: You need to change constantly; the challenge for us is to change as a business whilst keeping an entrepreneurial style running through it. As you grow and have more success, then holes start to appear in the organisation, and you need to take time out to understand what they are, talk to people about how to fix them and move forward quickly in the right way.
Q8. Tullow has grown to become a medium-sized independent and is growing into a much larger company. Is Tullow keen to drive forward on a path of increased growth with all of the complications that brings, or staying in the current dynamic mould?
Heavey: If you don't grow, you die! Our strategy is to continually grow the business; there are a lot of opportunities out there for us as a dynamic, but large E&P company. We can do things now that the majors cannot do. More than ever before, there is enormous potential to grow the business. Our strategy is to continue to grow, there are no obstacles in our way and we see further value creation in a large number of areas.
Uganda
Q9. What activity is expected in Uganda for the next two years?
Heavey: There are three main areas of activity:
Farm down two thirds of our interest in the three Lake Albert blocks to CNOOC and Total to create an aligned partnership
Submit a basin-wide development plan to the Government of Uganda and commence first commercial production from the Kasamene and Nzizi fields by the end of 2011
Continue with our very successful drilling campaign
Q10. Are you looking forward to collaborating with your new partners?
Heavey: CNOOC and Total are our new proposed partners and both the Government of Uganda and Tullow are extremely excited by this new long term partnership. All three parties bring different expertise to this project as we target first major production in 2014/15.
Q11. What is the position in Uganda in terms of licence renewals etc?
Heavey: As is usual in the oil industry we have ring fenced all of the areas where we have found oil for appraisal and development; we now have two years to work up our development plans and we should be in production by the end of 2011.
Q12. The press and public seem to indicate that the government got a raw deal from Tullow/ pricing?
Heavey: When the IMF looked at the Ugandan terms recently, it told Uganda that it needs to change the terms to be more in favour of the oil companies to help them to explore and develop more assets, so the biggest challenge we currently have is that the terms are not as good as others for us when you take into account the lack of infrastructure and the access to the coast.
Ghana
Q13. We end 2010 on a massive high achieving first oil in Ghana. What does the Jubilee achievement mean for the business?
Heavey: Tullow has always been known from a shareholders point view for adding value, rehabilitating old fields, our exploration or doing deals, so to actually take a discovery to first production in that short space of time is a completely new event for us. The whole industry is looking at us and thinking "how did they do that?". It's a very significant event and to have a world-class field operated by us is a huge boost to the business.
Q14. Do you think achieving the Jubilee project will transform Tullow?
Heavey: It's the next step up and Tullow's credibility as an offshore operator is certainly there now. The cash flow from Jubilee will be able to drive the next phase of growth for the business. So it will transform the business in a very positive way.
Q15. When you meet with your peers in the industry, how do they react to what Tullow has achieved in the last two years?
Heavey: I had dinner recently with one of the top people from one of the major companies and they'd seen the press release that went out on Jubilee [announcing the first oil event]. They said they never thought we'd get done what we have in the time frame. He said he sent a note around to all his business managers around the world which said, "That's how you do a deep water development". So I think we've shocked everybody. The major oil companies, certainly all of those that we've talked to, can't believe we've done it in the time-frame that we did.
Q16. Is there a price of oil that Jubilee economics were calculated on?
Heavey: We evaluate all projects, including Jubilee, under a wide range of oil price scenarios. The Jubilee development project economics are robust down to oil prices significantly below the current price.
Q17. Would we sell out of the Ghana asset if the offer was high enough?
Heavey: Ghana is a key part of our growth strategy, so it's not for sale.
Q18. How does Tullow see its five-year plan for Ghana in terms of continuity of the drilling team?
Heavey: We will have a very busy drilling schedule for the next five years; our programmes are continuing to expand. We have had further success at Tweneboa and Owo and these fields could become major development projects in the future. There still remains a number of significant exploration prospects in Ghana and we hope to continue drilling these over the coming years. What we really want is to open up new basins in west Africa and South America where we see prospects similar to those we have discovered in Ghana.
Q19. Do you envisage a point when all leadership positions in country are filled by nationals? Are there plans to train people to take over eventually and how long do you think it will take?
Heavey: We already have a number of key leadership positions filled by Ghanaians: Legal, Corporate Affairs & CSR, Drilling, Facilities and HR. Tullow's practice is that where the appropriate skills and experience are available, or have been developed, local offices should be staffed and run by local people. Training programmes are being put in place to ensure that we will have local people in senior positions throughout each organisation. Sometimes this might seem a little slow because we are in an exploration phase and require a very specific skill set that is not always available locally. Once we move into the Production phase, we then have more time to provide people with the right skills to localise the operation. The time it will take depends on the role, complexity of the operation and the phase of the business.
Q20. How do you see a Tweneboa development being managed?
Heavey: I think there are two main parts to a project like this. Exploration and Development planning could be run from London, as it has with Jubilee and worked very well. This would then be handed over to the country team to deliver the appraisal, development and production of the project. It's important to note that this hasn't been discussed or decided yet and as I said at the start of the interview, we need to continually look at what we are doing, take feedback on how we perform and change to improve if necessary.
Africa General
Q21. As the Majority Report on Africa is still not great, how come you have retained your passion for the continent after 20 years and what makes you hopeful for the future?
Heavey: We started in Africa, Tullow is an African business, it's where we have made our money, it's where we see our future and in very simple terms, we like it! We have worked all over the world and to me and most of the staff, Africa is a really great place to work. I enjoy working with Africans, they are great and we need to get more local people working for Tullow in our operations, the business will be happier and work better. We will be floating Tullow on the Ugandan and Ghanaian stock markets in the near future, which is a sign of our long term commitment.
People always ask me "what will happen to Tullow after you retire, will it be taken over?" I have always felt that the long term future for Tullow and the thing that will keep it independent is Africa, being the Adopted African National Oil Company, is where the future is. We operate in Africa and are growing with African managers and an African culture, we are listed on the London Stock Exchange and when this is mixed, it creates a great selling point for our company and a good partner for Africa. It's good to be strongly identifiable with one continent; it helps Africa to feel good about us.
Rest of the World
Q22. After a relatively quiet period of exploration in Europe, are you excited about the Netherlands campaign and how does it relate to the SNS assets?
Heavey: The UK has been a great business for us. The acquisition of the BP assets in 2000 transformed us. A lot of the good people that are helping to transform Tullow now, came from that team of people. It's always been a very important cog in the Tullow wheel. The UK business has decreased in size in relation to the other assets, but its incredibly important from a banking point of view, a stock exchange point of view, a cash flow point of view and it allows us to operate in other regions like Africa. The Netherlands gives us the opportunity of exploration which will mean growth and scale which we didn't have on the UK side. We have very good production but little to explore in the UK.
Q23. What are the plans for infill drilling in the UK?
Heavey: Well we are planning more activity in the UK but we did hold back a bit in the last two years from doing a lot of work in the UK, partly because of the collapse in gas prices, and also we had so much to spend on the bigger projects in Africa. Now that we are getting to the stage of commercialising the African assets we can go back and look at the developments of other assets including the UK, where we successfully drilled the Ketch 8 well earlier in 2010.
Q24. Is the French Guiana, work gathering momentum after farm ins?
Heavey: What you are seeing here is that the Tullow team is being recognised across the industry as the best E&P team in the sector. The super majors and big oil companies recognise that Tullow is the best in the business right now. Companies respect our opinion and that is because of our continued and repeatable success. The big companies are very happy to farm in and having two super majors farm into a new block is very good.
Q25. When are we likely to drill exploration wells in French Guiana?
Heavey: We have got about 100 major wells to drill in the next three years, which is a hell of a programme that may expand; lots of wells in South America, Asia, Africa and it's likely we will look to drill a well first quarter of 2011 in French Guiana and Guyana.
Q26. Do you anticipate an increase of activity in Asia, with the award of the off-shore licences in Bangladesh?
Heavey: Bangladesh has been a core part of our strategy for a number of years; we gain good revenues from the operations, have an excellent team and have a good relationship with the government. As I have said previously, once we start to commercialise the African assets, we will be able to use our capital to explore new ventures, develop new assets and I see South Asia as a place with a lot of potential.
Q27. There are now over 1,000 employees in Tullow globally do you have a message for Tullow employees?
Heavey: The share price throughout 2010 wasn't as great as it has been but that was to be expected. We've had quite a number of years with a lot of growth in share price and every now and then it needs a breather, and the focus this year has been on the development projects. So people may look back on the year and think from a share price point of view it has not have been great, but from a business point of view we've had a great year. I think what's important in Tullow is that everyone in the business has contributed fantastically in the last 12 months and together we have developed a fantastic business. Tullow is all about people and we have some of the best people around. We're the envy of the industry, not because of the assets we have in oil and gas, but because of the great group of people we have, the morale and the way people work.
Q28. This year we've delivered a number of CSR projects and continued to support local content. How important are these activities to our business and do you think they impact the opinions of communities where we operate?
Heavey: There are two real types of CSR - there's doing projects in the local communities where we work, these are very important however we have a much bigger responsibility to develop local expertise and local businesses too. We need to get much more involved in national training and education. That's the next step up and that will be our main focus going forward. It's very important for the long term nature of our business in all the countries that we're involved in, local content is key.
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