Tullow books $1.5bn writedown on lower price outlook

Tullow Oil said it expected to report a $1.5bn writedown after cutting its long-term oil price assumptions and lowering reserve estimates in Ghana.

The company said it was cutting its price assumptions to $65 from $75a barrel as it forecast 2019 gross profit of $700m and $1.7bn in revenue.

“Writeoffs include Jethro, Joe and Carapa well costs in Guyana as a result of drilling results and Kenya Block 12A, Mauritania C3, PEL37 Namibia and Jamaica licence costs due to the levels of planned future activity or licence exits.”

Tullow said it would cut capital expenditure in 2020 to $350m from $490m as it planned to spend $100m on decomissioning this fiscal year.

Group working interest oil production averaged 86,700 barrels of oil per day (bopd) in 2019, in line with expectations.

“Operations across the group's production assets have started the year in line with expectations and 2020 group average production guidance remains unchanged at 70,000 to 80,000 bopd,” the company said in a trading statement on Wednesday.

Free cash flow for 2019 was expected to be around $350m, with net debt cut $2.8bn and gearing expected to be around 2.0 times, Tullow added.