LONDON (Reuters) - Paul McDade, the incoming chief executive of Tullow Oil (TLW.L), said on Wednesday the Africa-focused oil firm’s appointment of its outgoing CEO as chairman may not be best practice but it was in the company’s interest.
McDade, who took over as CEO after shareholders approved his appointment on Wednesday, said the company had consulted various investors about the proposal and had moved ahead based on those discussions.
More than 92 percent of shareholders who voted at its annual general meeting approved the promotion of Aiden Heavy, who founded the company in 1985 and named it after the Irish town where it was set up, to chairman. The company said in January he would retire within two years.
Shareholder Royal London Asset Management had said it would vote against the proposal, saying it violated corporate governance principles designed to ensure independent oversight of the board.
“We acknowledge that in terms of governance practice it wouldn’t be considered best governance but we do think it’s the right thing for us to do as a company,” McDade told Reuters.
The oil company also updated the market on first-quarter trading on Wednesday, saying it had cut net debt by $200 million to $4.6 billion in the first three months of the year.
Tullow announced a $750 million rights issue on March 17 with the aim of raising money to bring debt below $4 billion and said on Tuesday that investors had subscribed to all the shares on offer.
Shares in Tullow were down 1.3 percent at 1539 GMT, underperforming the sector index .SXEP which was up 0.6 percent.
Debt reduction will allow the company to spend more of its free cashflow on finding oil, including expanding the search around its TEN fields off the coast of Ghana and tapping fresh resources in Suriname.
“We’re even looking at additional rig capacity beyond one rig in Ghana,” McDade said.
Tullow also said it had reached an agreement with Hague and London Oil (HALO) HNL.L to sell its Dutch portfolio. Production from the Dutch assets was forecast to be about 3,500 barrels per day (bpd) this year, Tullow said.
The London-listed oil minnow’s shares were suspended on April 4 pending news of the acquisition which is classified as a reverse takeover.
HALO said it would pay Tullow about 9.8 million euros (8.19 million pounds) for the acquisition, plus up to 20 million euros in contingent payments between Jan. 1, 2019 and Jan. 1, 2021.
Additional reporting by Ron Bousso; editing by David Clarke