Tullow Oil PLC (LON:TLW) has reported a US$1.6bn loss for 2019 with some US$2bn of write-offs, and, it has suspended dividend payments.
In Thursday’s early deals Tullow shares fell 19% to 14.48p.
The London-listed oiler said its cash flow guidance for 2020 is set at US$50mln to 75mln, based on an assumed average crude price of US$50 per barrel, but, noted the threshold for free cash breakeven was around US$45 (today Brent is priced at about US$34).
It added that 60% of 2020’s sales are hedged at a floor price of US$57 per barrel, while 40% of next years sales are hedged at around US$53.
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The company retained its previously slashed capex budget at US$350mln for 2020 though the company noted that it is exploring options to reduce further, if that’s required.
A process is underway to redetermine the parameters of Tullow’s reserves based lending, and, the company noted that it anticipates its debt capacity to be around US$1.9bn at the end of March.
Tullow said operations in the year to date are in line with expectations and repeated full year production guidance of 70,000 to 80,000.
“Even with recent events in oil markets, Tullow's assets remain robust: we are a low-cost African oil producer, with a strong hedging position, substantial reserves that underpin our business and a high potential exploration portfolio," said Dorothy Thompson, Tullow chief executive.
Financial results for 2019
Today’s financials confirmed what had previously been flagged by Tullow’s new management, amid its business review.
The company stated working interest production at 86,800 barrels oil equivalent per day for year.
It generated US$1.68bn of revenue, a US$759mln gross profit and a US$1.69bn loss after tax.
Tullow had around US$2bn of write offs, which was much more than the US$800mln guided as recently as January, and, it included US$1.25bn against exploration assets.
The exploration write-downs were predominantly against assets in Kenya and Uganda as long-term oil price assumptions lower to US$65 per barrel from US$75. The remainder related to assets in Guyana, Kenya, Mauritania, Namibia and Jamaica, and, the move comes “due to the levels of planned future activity or licence exits”.
Tullow suspended the final dividend, which would’ve amounted to US$100mln.
The company said it concluded its business review in February. Tullow now expects to reduce headcount by 35%, at a cost of US$50mln, and, it expects to save around US$200mln the next three years.
Discussing the COVID-12 coronavirus pandemic, Tullow noted its operational experience amid infection disease gained during the Ebola outbreak in West Africa and said it continues to monitor the situation.
If the outbreak escalates, the company said it will follow a country specific business continuity plan which sets out how Tullow will continue to operate, recover quickly from, and effectively manage the response.