Debt laden Tullow Oil plc (LON:TLW) is cutting its capital investment programme significantly this year as it continues to carefully manage its finances.
The Africa-focused exploration and production group said capex will fall to US$500mln from US$900mln in 2016.
The update came alongside full-year results which revealed Tullow to be on a financially slightly more stable footing, although still loss-making.
On revenues of US$1.3bn, the company’s after-tax deficit was US$597mln, which included a number of write-offs. That’s down from a US$1.03bn loss a year earlier.
Year-end net debt was US$4.8bn, which is around US$1.5bn more than Tullow’s current market capitalisation.
It says there is around US$1bn of “headroom” factoring in free cash flow and the ability to bump up the facility further.
It is currently in talks to refinance a US$3.3bn reserve-base facility due this year.
Its situation will have been aided by a deal early last month to sell a near 22% in the Lake Albert Development Project, Uganda, for US$900mln, although the payments are phased.
Oil production, which averaged 65,500 barrels a day in 2016, is expected to come in at between 78,000 and 85,000 barrels a day this year.
The rate of expansion has been capped by an international boundary dispute that has halted drilling of its TEN acreage off the coast of Ghana.
“As we focus our free cash flow primarily on reducing our debt, capital discipline remains critical,” said chief executive Aidan Heavey, who is stepping up to the role of chairman.
“We have made excellent progress with our East African developments and are building a high quality exploration portfolio to grow our business.”