Exploration group Tullow Oil is looking to close the first half of the year on positive figures – despite a forecast $415million write-off from poor drill results.
The company is set to record a strong revenue of around $1.3billion and gross profit of around $650million, as well as an unutilised debt capacity of $2.3billion, for the first half of 2014.
The positive figures were generated by successful re-financing of Tullow’s corporate revolving credit facility of $750million and its $490million Norwegian exploration loan facility, as well as positive drilling results from the firm’s Kenyan operations, particularly in the South Lokichar Basin.
The onshore licence will remain one of Tullow’s focuses in the second half of the year, alongside maintaining steady production levels from its Jubilee oilfield in Ghana and progressing exploration in Gabon and Ethiopia.
But mixed results from its Mauritania, Ethiopia and Norway exploration campaigns are set to result in a $415million write-off for the period. Post-tax, the figure will amount to $305million, with $150 million relating directly to 2014 wells, the firm said in a statement.
Additionally, Tullow will record a loss on disposal of $115million primarily due to contingent consideration adjustments in relation to its Uganda licence farm-down.
Group working interest production for the first half of the year 2014 averaged 78,100 barrels of oil per day (boepd), impacted by underperformance at its non-operated assets in Gabon and the Schooner-11 well in the UK.
But the company maintained its annual production guidance for the year unchanged, at 79,000 to 85,000 boepd.
Tullow has signed an agreement with Faroe Petroleum for the sale of its 53.1% interest in the Schooner unit and said it was making good progress in selling the remainder of its UK and Dutch North Sea assets.
“Tullow has continued to move the business forward over the last six months,” said Aidan Heavey, Tullow Oil’s chief executive.
“Exploration and appraisal success in Kenya has further de-risked the 600million barrels of oil of discovered resources.
“We are well funded following our second bond issue and we are making steady progress with our asset disposal programme. With potential basin-opening wells across the portfolio coming up in the second half of the year and strong revenue and cash flow, Tullow is in a strong position for the remainder of this year and into 2015.”
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