Revenue falls at Tullow as explorer under pressure

Revenue fell at Tullow Oil last year and the company reported $1.7 million loss as exploration write-offs and impairments hit.

The company announced its full-year results, confirming an expected disappointing performance. Tullow Oil is working on restructuring plans to cut costs, aiming to save $20 million of annual costs by cutting 35 per cent of its global workforce and closing its office in Dublin, which has about 55 staff.

Revenue for the year was $1.68 billion, down from more than $1.8 billion a year earlier. Gross profit was $759 million. Free cash flow, meanwhile,was $355 million with net debt down to $2.8 billion. That compares to $411 million in free cash flow in 2018.

Its loss after tax of $1.694 billion was driven by $2 billion in exploration write-offs and impairments, including a revised Uganda write-off.

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Tullow Oil came under pressure towards the end of last year with its shares plunging to a 20-year low after it cut it oil production forecasts, cut its dividend and announced that its former chief executive and exploration director had quit the company. Since then it reported that it had found less oil than expected after drilling an off-shore well in Guyana.

"This has been an intense period for Tullow as we have worked hard on a thorough review of the business which has led to clear conclusions and decisive actions," said Dorothy Thompson, executive chairwoman at Tullow Oil. "We are focused on delivering reliable production, lowering our cost base and managing our portfolio to reduce our debt and strengthen our balance sheet. Even with recent events in oil markets, Tullow's assets remain robust. We are a low-cost African oil producer, with a strong hedging position, substantial reserves that underpin our business and a high-potential exploration portfolio."

The company said its group working interest production averaged 86,800 barrels of oil equivalent per day, down on 2018 figures. Its capital investment totalled $490 million for the year.

Looking ahead to 2020, Tullow said group production in the year to date was in line with expectations, with full year guidance of 70,000-80,000 barrels of oil per day. Capital expenditure is predicted to be $350 million, with the company exploring options to reduce that further if required.