Tullow Oil revenues decline 35 per cent to $820 million

Aidan Heavey, the chief executive of Tullow Oil, said the financial benefits of the company's recent restructuring plan will become apparent in the second half of the year, after it reported a 35 per cent decline in revenue to $820 million (€742 million) for the first half of 2015.

This compares to revenue of $1.2 billion during the same period last year. The explorer said revenue for the first half of this year was “in line with expectations”.

Operating profit climbed 169 per cent to $97 million, due to a lower exploration write-off. This led to a reduced loss after tax of $68 million. Basic earnings per share amounted to a loss of 7.5 cents.

“There won’t be any more restructuring costs in the second half. If it wasn’t for a tax charge in Uganda and the restructuring, we would have made a profit in the first half,” said Mr Heavey.

He also said revenue was lower due to the fall in oil prices and asset sales.

“Our underlying cash generation remains solid and the restructuring programme is nearing completion and will deliver cost savings of $500 million over the next three years,” he added.

Mr Heavey said the explorer is making good progress with its development projects in West and East Africa.

He said Tullow is continuing to undertake hedging activities as part of the ongoing management of its business risk to protect against volatility and to ensure the availability of cash flow for reinvestment in capital programmes that are driving business growth.

The oil and gas exploration group’s net debt was $3.6 billion at the end of June.

The explorer spent $154 million on exploration and appraisal activities in the first six months and has written off $28 million in relation to this expenditure. This included write-offs in Norway ($6 million) and Gabon ($3 million) and new venture costs ($12 million).

In June, Tullow reached a $250 million (€225 million) settlement in a long-running tax dispute in the key region of Uganda. In July, the company prequalified for the upcoming Uganda exploration bid round.

“The field development plans have been submitted to the Government and we await the award of the production licences,” the company said.

Tullow’s overall net tax charge was $58 million in the first-half of 2015. This included a one-off tax charge of $108 million for settling the Uganda CGT liability.