Aidan Heavey seems an unlikely oil man. The chief executive of Tullow Oil is neither a dreaming geologist, nor a buccaneering tycoon. Rather, a softly spoken Irishman with strikingly blue eyes who started out as "the world's worst accountant". "I was bored stupid," he laughs. "But it was great training because I can see through figures very quickly."
Something must be right because Tullow is soaring. The company has been in the FTSE 100's top risers for five consecutive years and has more than doubled both its market cap and its staff in the last year alone. Mr Heavey's refreshingly un-sumptuous office at the head office in unfashionable Chiswick is festooned with pictures of Africa. There is undoubtedly passion, but it is not for oil per se. "I have no interest in how you find oil and gas," he says. "But I am interested in making sure that everybody is happy and makes money out of it." It's a different approach, not just to the ponderous bureaucracies of the majors, but also to the caricature of the neck-or-nothing minnow.
Instead, the passion is for the company itself. Mr Heavey started Tullow with his own money in the 1980s boom time. But rather than go to the North or Irish Seas as so many others were doing, Tullow bought up depleted oil and gas fields in Senegal. "We started from scratch with no money and no brains," Mr Heavey says. "I had never been to Africa and knew nothing about the oil industry, but business is business."
Tullow's first 15 years were a lot of trial and error, and by 2000 it was time to move up a level. For Mr Heavey that meant focusing on getting the best people, which meant finding cash. The first big deal was to buy BP's North Sea gas assets for £200m, doubling Tullow's size at a stroke. The next step was to balance the business between production and exploration. Cue the Energy Africa deal in 2004: a $570m (£345m) reverse takeover that brought with it massive expansion in Africa and another slug of new staff. Since then, the company has expanded fast, going from 200 to 900 staff, and it is set to double in size again over the coming year. It has also proved unusually good at finding oil, with 17 successful strikes out of 22 attempts last year. "Oil and gas are things that come and go, like the stock and trade in a shop, but it is the people that are the main asset of the company," Mr Heavey says. "With investors and shareholders spending up to $100m per well, the last thing you want is an idiot telling you where to drill."
Not only is Tullow an unusual oil company – led by a man who wants to maintain its "family feeling" despite rocketing growth – it is also operating in a different type of world. Gone are the days of foreign companies exploiting the developmentally vulnerable: nowadays both environmental and humanitarian responsibilities are unavoidable.
On the shores of Lake Albert in northwestern Uganda, Tullow's unprecedented 23 out of 24 strike rate has proved reserves of 750 million barrels so far in a field that could total up to 2 billion. But although the first oil will not be produced until next year – and initially only in small amounts for the domestic market – Tullow's presence has already had a profound effect. Before oil was found, the region was isolated and poverty-stricken. With no roads, no schools and no hospitals, remote villages subsisted on catch from the lake. Life was hard: thirty people a month died from cholera, fishermen drowned, and 30 per cent of babies died at birth. Now, with Tullow spending $1m a year – around a third of the cost of drilling a hole – on infrastructure, hygiene and education for the local area, cholera has been eliminated and local clinics draw people from as far away as Congo. There are roads to the villages, a lifeboat on the lake, and even a locally staffed life-vest factory. "You can't work in an area where people are dying around you," Mr Heavey says. "Not one drop of oil has been pumped out, but the region is transformed."
Even the business side of the oil industry has changed. The contracts Tullow is currently negotiating with the Ugandan government reflect a new balance of power, where both oil and the vast majority of the revenues will go back to the country. "This is the first time that a company with modern contracts will be producing all the oil," Mr Heavey says. "There's a huge chunk of revenues for the country to finance itself, and total transparency."
But some things about the industry will never change. Third-party contracts to build a local refinery and the 1,300km pipeline to take oil to the coast will go out to tender when the deals with the government are wrapped up. Both are already attracting attention. Mr Heavey dismisses with a wave of his hand rumours that Asian and Middle Eastern backers have offered to fund the pipeline, and he is equally unconcerned by market chatter that Tullow is a takeover target. "Oil is a wonderful industry for rumours, and they are all rubbish," he says. "People have been saying that Tullow is a takeover target for as long as I can remember, and I'm the longest-serving chief executive in the FTSE 100."
Tullow's interests in Ghana are another source of speculation. The Jubilee field has more than a billion barrels proven – with early production due to start next October – and nearby Twenboa could be double the size. With Tullow's Jubilee partner Kosmos set to auction its $3bn (£1.8bn) stake, speculation has mounted that the buyer might want Tullow's holding as well, or that Tullow might be the purchaser itself. As a result, the company's share price has soared in recent months. But Mr Heavey is not having any of it. "We're not planning to increase our stake," he says, matter-of-factly. "We are ignoring the whole process because it doesn't affect us."
With the excitements in Africa, and plans for exploration in South America, Tullow's North Sea assets are rather the poor relation. The company has no plan to leave the area, not least because it helps in negotiations with bankers. But no new investment will go in while it is so uncompetitive. The problem is the tax regime, and the concessions in the Budget are not enough to make a difference. "Since we arrived in 2000, tax has gone up twice and it is the only place in our portfolio where we don't know what the tax will be," Mr Heavey says. "When there is a limited amount of capital, we invest where it will give shareholders the biggest return – and that is Africa."
There is still oil and gas in the North Sea, it is just a question of getting it out. Which brings us back to Senegal. "Tullow started from nothing because the World Bank and the Senegalese government gave us incentives to take over old fields," Mr Heavey says. "The North Sea is in serious decline but it could be reactivated with the right incentives."
Meanwhile, Tullow's future is in Africa. And regardless of Mr Heavey's unromantically commercial background, the oil business will never quite lose its glamour.
Aidan Heavey: From audit books to oil
Mr Heavey, 56, is married with three children
1985 to present: CEO of Tullow Oil, which he founded in 1985
1979–84: financial controller, first at Aer Lingus, then at Tullow Engineering
1974–79: auditor at RJ Kidney & Co
1978: qualified as a chartered accountantReuse content