Tullow Oil Plc, an Africa-focused UK explorer that’s lost half its value in a year, swung to a loss in 2014 because of declining oil prices. It suspended its dividend.
The company had a net loss of $1.56billion, compared with a profit of $169million a year earlier, after writing off the value of assets, Tullow said. That exceeded the average estimate for a $1.17billion loss of 11 analysts in a Bloomberg survey.
“2014 was a difficult year for our industry and a challenging one for Tullow as our results today demonstrate,” chief executive officer Aidan Heavey said.
“In response to this, and the fall in the oil price, we have reset our business and are focusing our capital expenditure on high- quality, low-cost oil production in West Africa.”
Tullow, among the most active explorers in Africa, said in January it won’t drill a single offshore exploration well in the continent this year after the crash in oil prices led drillers to reconsider the high cost of exploring there. The company cut its exploration budget to $200million from $1billion and said it expected to write off $1.2billion for exploration in French Guiana, Mauritania and Norway.
Tullow follows other oil companies in cutting budgets amid the plunge in crude to below $50 a barrel this year. BG Group Plc last week reported a record quarterly loss after writing down the value of some of its assets. BP Plc cut jobs in Angola, the North Sea and Azerbaijan to protect returns to investors.
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