Oil baron

The Friday Interview:Aidan Heavey isn't the type to get too excited. On Wednesday, Tullow Oil, a company that he founded in 1985, officially hit the big time with its elevation to the prestigious FTSE 100 index, writes Ciaran Hancock.

It didn't just scrape in either. Tullow was ranked at 75, comfortably above the zone where companies in the index are in danger of being booted out when the next reshuffle comes round.

Most chief executives would have done a merry jig around their boardroom or a bit of fist punching in front of a mirror. Heavey, by contrast, claims not to be too fussed.

"It doesn't make a huge difference to me," he said nonchalantly on Wednesday, while looking out the window of the company's ultra-modern Chiswick Park office in London. "I just see it as another index."

There was no knees up, either. In Roy Keane-like fashion, the Manchester United supporter eschewed any celebratory drinks and flew to Oslo on Wednesday evening for an investor roadshow.

Tullow is only the second Irish company to make the FTSE 100, the other being Fran Rooney's Baltimore Technologies. Baltimore's success was short-lived, however, with the company and its chief executive both falling from grace in spectacular fashion.

"We are a very different company to Baltimore," Heavey said. "I could never understand it [ Baltimore]; I could never get it."

He wasn't alone on that score.

Admission to the FTSE 100 is the latest in a string of important milestones and achievements for Heavey and Tullow. Founded in 1985 on a shoestring, Tullow began life exploring for oil in Senegal.

It only really began to register on the investor radar in late 2000 when it agreed to acquire gas producing fields in the North Sea off Britain from BP.

That gave Tullow steady cashflow and the confidence to fund its exploration activities around the world.

"It was a step change for the business," he said. "There was a big credibility issue to deal with because we hadn't operated big offshore assets before. Most people said it was madness and that we'd paid too much."

The North Sea gas assets were supposed to run out in 2005. Instead, Tullow successfully extended their lives and, with astute bolt-on acquisitions and successful exploration work, the fields are producing more gas now than when the company bought them.

In 2004, Tullow again moved up a level with the acquisition of Energy Africa for $500 million. The audacious deal gave the company a large footprint of assets on that continent.

In 2005, Heavey won the Ernst & Young Entrepreneur of the Year award, putting him firmly on the corporate map at home.

Late last year, Tullow pulled off its biggest ever deal with the £595 million acquisition of Hardman Resources in Australia. This solidified its position in Africa and gave it assets in South America and Portugal. At the time of that transaction, a number of analysts again questioned the wisdom of the deal, arguing that Tullow had overpaid, that Hardman's assets were risky and that doing business in Africa was fraught with difficulty.

Almost 12 months on and the negative chatter around the Hardman deal looks foolish to say the least.

Tullow's exploration programme this year has firmed up two licences in Uganda and Ghana as being world-class discoveries.

Tullow's share price has risen by 33 per cent this year to €8.09 and it is now worth €5.8 billion. The company has 120 licences in 22 countries.

It's all a far cry from the early days when Heavey tapped friends and family for cash and knocked on the door of every institution in London looking for funds.

An accountant by training, he was drawn into the business during his time with Tullow Engineering and the glamour of Dallas, the 1980s hit American TV soap opera.

Ironically, Heavey fancied being goody two-shoes Bobby Ewing, who always seemed to play second fiddle to his brother JR. "Bobby had all the fun and he had Victoria Principal, too," Heavey says with a grin. "Bobby had a nice, soft life, not too much work. JR was a slut."

Heavey persuaded 22 family and friends to invest up to €64,000 each in a business that he freely admits he knew little about.

"They must have been off their heads. They were investing in an idiot who knew nothing about oil or the oil business in Ireland," he said. "I really believed in it and they bought into that enthusiasm."

Of the first eight wells drilled by Tullow, five were dry. Heavey stuck with it though, and is now the longest serving chief executive of any company listed on the London Stock Exchange.

Heavey says that this is just the beginning for Tullow. The company produces about 75,000 barrels of oil a day, mostly from the North Sea and has reserves of about 500 million barrels.

That picture should change radically over the next five years. In Ghana, its Mahogany offshore prospect could hold one billion barrels of oil or more. Tullow has a 35 per cent interest in the area. It also has a sexy prospect in Uganda and licences in Namibia and India offer huge potential, too.

Tullow will spend £170 million (€248 million) on exploration this year and more in 2008. Heavey said that this is not a problem. The company is generating about $1 billion in cash each year and the banks "are currently throwing money at us".

He says that its portfolio might also be trimmed down with the disposal of assets that are no longer considered material to the business. The Congo and some smaller interests in the North Sea might go.

Tullow is also likely to seek project finance for its Ghana exploration work.

Heavey has shared in Tullow's success. He owns six million Tullow shares directly, worth more than €48 million at current prices. That's to say nothing of his share options or stock held by his family.

Tullow's recent good run has led to much speculation of a possible takeover from a bigger player in the oil industry.

Heavey says that he has no interest. About 20 per cent of the shares are "tightly held" by friends and family. "We see huge upside in the business and we won't sell."

Never, under any circumstances? "If somebody puts a ludicrous offer on the table then we'd have to look at it but there aren't too many idiots out there."

Not that Heavey wants to lead Tullow till he drops. At 54, he acknowledges that the day probably isn't too far off when he might hand over the reins and takes a step back. "There's a great team of young people who already do a lot of the hard, day-to-day work here. My role has changed a lot."

What then?

"Like everybody in Ireland, I'm into property," he said. Heavey wouldn't elaborate too much, except to say that he owns "a lot" of houses, and his property portfolio could be worth more to him than his Tullow interests.

"When I bow out of Tullow, and I will, I don't think I'll stay in the oil industry. That will be the end of me. I'll just stick with the property."

ON THE RECORD

Name:Aidan Heavey.

Job:Chief executive Tullow Oil.

Age:54.

Family:Married to Lorraine with three children.

Career:Worked as an accountant in business before founding Tullow Oil in 1985. Has led the company since that time.

Something you might expect:Won Ernst & Young Entrepreneur of the Year award in 2005

Something that might surprise:His wife Lorraine manages the Ascot United boys under 8s team in Surrey, for which his son plays.

Outside interests:Takes a huge interest in community projects in Africa both personally and through his role with Tullow. Plays golf and enjoys watching football.