Interview

Aidan Heavey, Chief Executive Officer, Tullow Oil

What was your first job in the oil and gas industry, and what were your first impressions of the industry when you began working in it?

My first job in the industry was starting up Tullow, which was very different from my previous jobs. The global aspect of the business, the opportunity to become involved in operations around the world, and the chance to meet fascinating people in doing so were the things that first excited me about the industry.

What made you decide to start Tullow Oil?

My background was not in engineering. I was an accountant before I decided upon a change of career. Back in the 1980s the oil industry grew fast before the oil price collapse. The North Sea was in full swing and many small oil companies were starting up in Ireland. It was similar to the dotcom boom during the late 1990s.

Oil and gas seemed like an exciting industry, and setting up Tullow was the way for me to get involved.

In 1985, I spoke with a friend in London about exploration fields in Africa that big companies were abandoning because they were discovering gas rather than oil. One of these was a gas field in Senegal discovered by SAP (Société Africaine de Pétrole). This particular field was connected to a power station. Following negotiations with the Senegalese government, the lease was then granted to us and from there Tullow was born.

How have mentors impacted your career? Please mention the major milestones for Tullow Oil since it was founded.

I’m afraid I never had a mentor, but there have been many milestones for the company.

Obtaining the lease in Senegal and proving to the authorities that we could operate the field was a big achievement. During the early ’90s when commodity prices were very low it became a matter of survival for Tullow, which we managed well. Then in 2000 came a big step change as BP sold off their gas interests in the North Sea. We bought some of these fields, which doubled our production overnight. This allowed us to hire more engineering staff, which in turn dramatically increased our cash flow.

Then in 2004, the acquisition of Energy Africa doubled our business again. This was a particularly noteworthy milestone as the acquisition brought with it an influx of exploration interests into the company, transforming us from a strictly production company to an E&P company.

From an investor perspective, finding the Jubilee field in Ghana was a dramatic change, as it was our first deepwater well.

What have been the main drivers for Tullow Oil? How has the company evolved over the years?

Tullow is different from other small E&P companies. Everything we do is long term, and, as such, our main focus is very much on our people. Oil and gas assets come and go, but our people will always be our real asset. We try to make sure every part of the business is the best-in-class.

Our mentality hasn’t really changed over the years. However, it is probably easier to attract the best people now. We have been the fastest growing oil company ever in the European market and everybody likes to be on a winning team. We are at a stage now wherein we have created our own peer group, somewhere between the independents and the majors.

Tullow Oil has been particularly successful in exploration and in delivering major projects. What have been the key factors behind your success?

If you have a single person looking at a location, the risk is increased, so we always put big teams in place to select the best prospects. Once they have been identified, we rank them and drill the top 10%. Preparation work is one key point; the second is that we invest heavily in everything we do.

We follow geology. We are very successful in Africa, and we are following the same trend to South America. We made a big discovery in French Guyana with the Zaedyus exploration well. You need the best team of engineers to drill and to produce a field. We drilled Jubilee, and it was the fastest deepwater well drilled in Africa. It’s also worth noting that you cannot be the best explorer if you don’t have the best finance department to pay for that. Every single team has to be the best and this enhances the value of the business. If you get that right, you have a very good business.

Your company has grown dramatically, particularly in the last decade. What is next for Tullow Oil? Do you intend to become a major operator?

Tullow is Tullow; we are not trying to be anybody else. All we want to do is to make the business better. You have to be honest—honest with staff and honest with yourself. Regarding strategy, I have never read a strategy book and I think that predicting things is very difficult. This industry changes continuously. I try to sit down and ask: Is this company fundamentally better? Is every part of the business the best-in-class? By being the best-in-class you are able to provide value to shareholders. However, if you are very focused on a strategy, it can limit you. You need to free your mindset and ask: How good can this business be?

How is the current financial situation affecting Tullow Oil and other oil and gas independent operators?

It hasn’t affected us. We managed to get USD 2 billion from banks and since then, with the success of Jubilee, we have secured banking facilities of USD 4.5 billion, all during the banking crisis.

Companies are struggling to recruit YPs and secure their loyalty to a company. What is Tullow Oil doing to address this?

At the end of 2010, we had 900 people; by the end of 2011, we had over 1,500 people, and that figure has risen again this year. Our turnover is less than 1%, so we haven’t had problems retaining talent. We have now started initiatives to get local engineers into universities and scholarships in places where we operate. Our intention is to create our own staff with its own culture. If you look at Ghana, for example, our plan is to have our Ghana operation run entirely by Ghanaians, and we are getting there. We see that as the future.

People like a career path, and, in order to provide it, companies need to be there for the long term. Some independent oil companies tend to find oil and then sell the business. The senior management makes a lot of money and the shareholders make a lot of money, but then the employees are left thinking: What are we going to do next? We don’t play that game. This is a long-term business for us, and our shareholders realize that. We really see this as a business for life.

When you are recruiting someone to join your team, what qualities do you look for? What would make someone stand out to you?

People stand out if they can work in a team. Honesty is very important. If you can honestly think about yourself and say, “I am good at this but I am bad at that,” then that’ll help you out. Nobody is good at everything, and the reason we have teams is to fill any gaps. I don’t like it when someone pretends to be good at something he or she is not. You have to be humble in the way you approach things. The right people ask if they do not know something.

Exploration is a good example. You have teams analyzing 400 prospects, and our team members get together and compare everybody else’s prospects. To pick the best ones, you need to be honest and modest. You do not need to be the smartest person in the world, but if you are a good team player, that is what counts.

It helped that I did not have a technical background when I started the business, so I have never told the geologist or the engineer how to do his or her job. I was not a good accountant, so there is no point in trying to tell accountants how to do their job either.

In a growing company like Tullow, how do you balance freedom and spontaneity in decision-making, with rigid processes?

That is a big issue in every company. In our early days, we didn’t have many processes. As the business grew, it became clear that more processes were needed. These things build up very fast without most people realizing it. We allow people to challenge processes to ensure we aren’t tied into processes that are too restrictive or don’t make much sense. You want to get everybody thinking, not simply looking at the next step they have to follow to get from A to B. I challenge processes all the time.

What is the main competitive advantage of independent-based oil companies vs. the majors?

The majors are very different. We only compete with the majors’ E&P divisions. Their E&P divisions are small parts of huge organizations with a lot of bureaucracy. It is very difficult for them to compete with us. We are a small organization based on what we do. They cannot move at the pace we do. There is no way they could have found the fields we have in the last few years because they would not allow their exploration teams to work in such a free-flowing way. However, they are our ideal partners. They have many things we do not have, including massive financial clout.

Free time is often scarce in a career like yours. How do you keep a good work and family life balance? Do you have any advice for YPs?

Easy! Family comes first. You have to balance your personal life with your work life. I would never sacrifice my family for my business. Once you do that, you do not have a clear head. You need to have people who want to come to the office but are also happy to go back home. I sometimes send people home from the office if I think they are working too late. Life is very short. Do not stick your head in the books all the time. You have to enjoy yourself. You do not want to get to the age of 60 and think: What I have done with my life?

Have you had professional interaction with SPE in the past? Has your workforce had the opportunity to leverage company activities with SPE expertise?

Personally, I haven’t, but I know that our professionals here have had a lot of interaction with SPE and they use it on a regular basis.


Aidan Heavey graduated in 1973 from University College Dublin with a BComm degree and subsequently qualified as a chartered accountant in 1976. He started his career as an accountant with Blueskies Holidays, a subsidiary of Aer Lingus, and then moved to Tullow Engineering. He was a founding director and shareholder of Tullow Oil and has played a pivotal role in the the company’s development since its formation in 1985. Heavey has built an exceptional team within Tullow. Through his leadership and vision, the company has grown to its current international status as a leading independent oil and gas exploration and production (E&P) group. Tullow currently ranks in the top quartile of the Financial Times Stock Exchange (FTSE) 100 with a market capitalization in excess of EUR 13 billion.

Tullow has its headquarters in London but maintains an active E&P team at its Dublin office, which is also the center for the company’s worldwide geophysical operations. The company currently has interests in 22 countries across Africa, south Asia, Europe, and South America.

Heavey’s entrepreneurial skills were recognized in 2005 when he won the Ernst and Young Entrepreneur of the Year Award in Ireland. Under his stewardship, Tullow has placed a strong emphasis on corporate and social responsibility and environment, health, and safety. Tullow’s social programs foster and support long-term development and self-sustaining enterprise in local communities where the company operates.

Heavey is a director of Traidlinks, an Irish-based charity established to develop and promote enterprise and diminish poverty in the developing world, particularly Africa.


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