Revenues have slid by 27%
Full-year financial results from Tullow oil confirmed the impact of rock-bottom oil prices on the listed Irish company whose interests are based in West Africa.
The group has just reported losses after tax of $1bn for the year to December following significant write-downs on the value of exploration licences and existing facilities, and heavy charges for the cancellation of drilling equipment. Revenues fell by 27%.
The company, whose share price has fallen by more than 60% in the past year, continues to try to reassure investors of its ability to survive the oil price storm.
It points out that more than half of current year production is hedged at $75 per barrel; that its current cost of production in West Africa averages between $10 and $15 per barrel; and that its next major asset, the so-called Ten field in Ghana, is on schedule to begin production this summer.
It has net debts of $4bn, but recently negotiated extended bank facilities; it has slashed capital investment and is on track to deliver $500m in annualised operational cost savings.
No dividend was declared for the full year.
Tullow chief executive, Aidan Heavey commented on the results, "Our challenge in 2016 is to be equally robust in responding to the uncertainties that remain in the sector.
"In the year ahead, we have three key priorities: ensuring continued low-cost production from West Africa - including the start-up of production from TEN between July and August 2016; driving further reductions in operating costs and capital expenditure; and focusing on deleveraging the balance sheet through free cash flow generation and strategic portfolio management."