Tullow Oil expects to write-off of $1.5bn

Tullow Oil expects write-off of $1.5bn (€1.35bn) in respect of last year.

This is primarily due to a reduction in the group’s long-term oil price assumption from $75 a barrel to $65 a barrel, and a reduction in reserves at its TEN project in Ghana, according to an operational update from the group.

Tullow’s oil production averaged 86,700 barrels of oil per day in 2019, which was in line with expectations.

Full year revenue for last year is expected to be around $1.7bn, while gross profit is expected to be circa $700m.

Capital expenditure in 2019 was around $490m.

Dorothy Thompson, chairman of Tullow Oil, said: “Since our December announcement, Tullow’s senior team has been working hard on a major review focused on delivering a more efficient and effective organisation.

The fundamentals of our business remain intact: recent reserves audits demonstrate that we have a solid underlying reserves and resources base in West and East Africa, our producing assets continue to generate good cash flow and we retain a high-quality exploration portfolio.”

Looking to this year, capital expenditure is expected to be around $350m, with an additional $100m expected to be spent on decommissioning.

In Ghana, recent activity at Jubilee includes the tie-in of the J-54 water injector well and planning for a maintenance period at the end of January to increase gas processing capacity.

At TEN, the drilling of a production well on the Ntomme field has commenced and the well is expected to be tied-in by the end of the first quarter.  

In Kenya, the early oil pilot scheme (EOPS) is suspended due to severe damage to roads caused by adverse weather in the fourth quarter of 2019.

Trucking remains on hold until all roads are repaired to a safe standard. Work continues with Joint Venture Partners and the Government of Kenya to progress the development project, Tullow said.

Late last year, in one day alone shares in Tullow fell by 70pc after CEO Paul McDade quit and the company lowered its production forecasts.

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