Tullow profit almost halves after oil price drop

Tullow Oil said profit almost halved in 2020 as oil prices fell during the Covid-19 crisis and that production would decline in 2021.

Gross profit for the year to the end of December was about $0.4bn, down from $759m a year earlier, the company said in a trading update. Profit dropped 47% as revenue fell 17% to $1.4bn.

Tullow said Covid-19 had little impact on production, which fell to 74,900 barrels of oil equivalent a day from 86,800 the year before but its performance was hit by the falling price of oil during the crisis.

The group’s realised oil price for the year was $50.8 per barrel including hedge receipts of $0.2bn compared with $62.4 per barrel in 2019.

The company forecast production of about 63,000 barrels a day in 2021. The reduction reflects a drilling hiatus in 2020, a planned shutdown at its Jubilee field offshore Ghana in September and deferred development drilling in Gabon, it said.

Net debt at the end of 2020 fell to $2.4bn from $2.8bn a year earlier resulting from $430m free cashflow boosted by the sale of Ugandan operations for $500m.

Rahul Dhir, Tullow’s chief executive, said: “Despite the challenges that 2020 presented, Tullow delivered production in line with expectations, executed major reductions to its cost-base and reduced net debt through the Uganda asset sale.”

The company spent $70m on redundancy costs in 2020 as part of a plan to save $125m. It said the plan was completed.

Tullow’s shares fell 1.7% to 30.72p at 09:45 GMT.