Tullow Oil reviews costs amid low oil prices as it reports in-line trading
Tullow Oil is reviewing its costs in light of low international oil prices, according to a trading update on Wednesday.
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The group said its financial performance in the year to date, before exploration write-offs and impairment charges, was in line with expectations.
Average working interest production guidance for the full-year remained on track for West Africa but Europe production was hurt by underperformance from the Schooner, Ketch and Katy fields.
Full-year pre-tax operating cash flow before working capital is projected to come in at about $1.7bn.
Capital expenditure for the full year was in line with current guidance of $2.1bn and net debt was expected to be $3.2bn.
An impairment charge for the full-year was expected to include an updated assessment of the recoverability of the Uganda contingent consideration, a review of carrying values of all property, plant, and equipment assets in light of current commodity prices and a appraisal of the carrying value of Goodwill in relation to the Spring Energy acquisition in Norway.
"In light of current oil and gas sector challenges including the commodity price environment, we are reviewing our capital expenditure and our cost base to ensure that Tullow is well-positioned for future success,” chief executive Aidan Heavey said.
“In 2015, we will be focusing our capital spend on producing and development assets, particularly in West Africa where, by 2017, the Group expects to be producing, net to Tullow, over 100,000 bpd of high quality, high margin oil Our overall exploration spend will be significantly reduced and will focus primarily on East Africa where we have major basin-opening potential. ”