Tullow Oil stuns the market with US$2.3bn write-off as rock...

Tullow Oil stuns the market with US$2.3bn write-off as rock bottom oil prices make their mark

By Ian LyallJanuary 15 2015, 8:35amhttp://www.*.co.uk/genera//img/companies/news/oil_barrel_stack_350_50051557d2b0c_54b77c530224f.jpgProduction, which averaged 65,300 barrels a day in 2014, is expected to be stable at 63-68,000 this year, rising above 100,000 barrels next.
Explorer Tullow Oil (LON:TLW) has written off US$2.3bn from the value of exploration work and some of its assets, with part of this massive impairment charge the result of lower commodity prices.
The Africa-focused group also said it had pegged back its 2015 investment programme by a further US$200mln as it confirmed 2014 revenues would be US$2.2bn and pre-tax cash flow US$1.5bn.
However, it also revealed its ability to weather the current industry downturn where crude prices are trading below US$50 a barrel.
It said its cash operating costs were low at US$13 a barrel, while its big discovery, the Jubilee Field offshore Ghana, pumps the oil to the surface for just US$10 a barrel.
"While this is a challenging time for our sector, Tullow is fortunate to benefit from world-class, low cost and high margin assets, strong and growing cash flows and a broad, diversified funding position," said chief executive Aidan Heavey.
Production, which averaged 65,300 barrels a day in 2014, is expected to be stable at 63-68,000 this year, rising above 100,000 barrels next.
On Wednesday Premier Oil (LONMO) revealed it will take a US$300mln hit in its 2014 accounts as a result of low oil prices.
The company also told investors it has postponed discretionary spending and begun a broad cost-cutting programme.
Investors in the oil sector have been briefed to expect a significant shake-up from BP imminently as the major attempts to wrestle with the plunging oil price.
Tullow's shares, off 57% in the last year, rose 2% in early trade.