Tullow Oil Plc has initiated strict measures to cut down on its losses resulting from a fall in oil prices and a farm down in Uganda. Tullow is one of the joint venture companies operating in Uganda’s oil rich Albertine region.
The others are China’s CNOOC and French’s Total, which bought a stake of 66 per cent in Tullow during a farm-down in 2012.
In Its 2014, financial year results, the company announced suspension of dividends and review of cost base and efficiencies expected to deliver cash savings of around United States $ 500 million over the next three years.
The report shows that the company has experienced a 16 per cent revenue loss from 2.6 billion dollars in 2013 to 2.2 billion dollars last year with a net debt of $3.1bn.
Tullow’s Chief Executive Aidan Heavey admits that the company is experiencing hard times saying 2014 was a difficult year for the industry and Tullow in particular.
He says in response and the fall in the oil price, they have reset their business and are focusing our capital expenditure on high-quality, low-cost oil production in West Africa.
The CEO added that the company would increase and diversify its sources of debt capital, reduce its exploration expenditure and implement significant cost saving initiative.
Heavey hopes that the measures will provide the company with substantial headroom and liquidity to deliver on its strategy.
Tullow is now focusing more in West Africa and hopes that the TEN project in Ghana will increase its net West Africa oil production to over 100,000 barrels of oil per day by the end of 2016.
The company’s 2015 capital expenditure projections are set at $1.9 billion with further reductions targeted; including a materially reduced exploration and appraisal budget of $0.2 billion.
The company’s report indicates that it will focus more in West Africa and their on-going exploration in Kenya.
The report shows that the company’s working interest oil production averaged 63,400 Bop in 2014 and Ghana’s Jubilee field Gross production averaged 102,000 barrels of oil per day in 2014, forecast to average 100,000 barrels of oil per day in 2015.
The company’s operating costs in the region are said to be comparatively lower at 13 dollars per barrel. The company denies speculation that it is in the process of closing operations in Uganda.
The report says it will continue with the project development plan in Uganda which includes the optimisation of well designs as it waits for Production Licences which it applied for in 2013 and 2014.