Paul McDade, the incoming chief executive of Tullow Oil, said today the Africa-focused oil firm's proposal to appoint its outgoing CEO as chairman may not be best practice but it was in the company's interest.
McDade is due to take over as CEO today if Tullow shareholders approve the appointment.
He said the company had consulted various investors about the proposal and had moved ahead based on those discussions.
Tullow said in January that CEO Aidan Heavey, who founded the company in 1985 and named it after the town where it was set up, would be promoted to chairman and retire within two years.
Shareholder Royal London Asset Management said it would vote against the proposal at today's annual general meeting, 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.
Shareholders will meet on the outskirts of London to vote on Heavey's appointment and other resolutions, including management pay.
The oil company also updated the market on first-quarter trading today, saying it had cut net debt by $200m to $4.6 billion in the first three months of the year.
Tullow announced a $750m rights issue in March with the aim of raising money to bring debt below $4 billion and said yesterday that investors had subscribed to all the shares on offer.
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 that it had reached an agreement with Hague and London Oil 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 company'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 €9.8m for the acquisition, plus up to €20m in contingent payments between January 2019 and January 2021.
