Tullow Oil, one of the largest Africa-focused oil explorers, was mid this week ejected from the FTSE-100 following a drop in its stock price due to falling oil prices on the international market that has affected oil & gas search firms adversely, the London Stock Exchange said on Wednesday.
The Africa-focused explorer slipped into the FTSE-250 index after losing more almost half of its value since the slump in global oil prices started in the last quarter of 2014. It entered the FTSE 100 in 2007.
It was replaced by Hikma Pharmaceuticals, which in November raised its annual revenue growth target due to strong demand for its products.
The drug company became the first ever Jordanian company to enter the FTSE 100.
Concerns that a boundary dispute between Ivory Coast and Ghana could delay a project off the West African coast also affected the firms share price, Reuters reported.
Getting into the FTSE 100 can often fuel further demand for a company’s shares, since funds that track the FTSE or invest in the index can then add that stock to their portfolio.
The demotion of Tullow oil to the smaller firm index means index tracking funds could start offloading its shares.
The changes to the FTSE 100 and 250 indexes will take effect at the start of trading on March 23.
Tullow has suffered a fall in its share price and recently reported a £1.3 billion pre-tax loss – its first in 15 years. The loss followed the company’s revelation of a £1.5bn write-off at the beginning of the year.
Its shares are about 60 percent down from their 52-week high. This places its market capitalization at about £3.3 billion, CITY.A.M. reported.
The explorer is however expected to perform better this year after the company cut back on major exploration expenditure to focus on its producing assets.