Reviewing assets in a declining oil-price environment, Tullow Oil PLC reported pretax write-offs totalling $2.7 billion.
An exploration write-off of $400 million is primarily related to 2014 activities in Norway, Mauritania, and Ethiopia. An additional $1.2 billion in noncash exploration write-offs are related to drilling and license costs from prior years and include previously reported unsuccessful offshore efforts in French Guiana, Mauritania, and Norway.
The assessment also includes $600 million in various impairment charges and $500 million in disposal charges.
Tullow expects to report 2014 revenue of $2.2 billion and gross profit of $600 million.
Tullow’s 2015 capital expenditures are projected to be $1.9 billion. Included are exploration expenditures of $200 million, down from November’s projection of about $300 million (OGJ Online, Nov. 13, 2014). Exploration will target “high-impact, low-cost” opportunities in East Africa.
Capital is being reallocated toward production assets and commercialization of existing discoveries, and will focus on “delivering high-margin oil production” in West Africa. That area is expected to grow to 100,000 b/d net to Tullow by the end of 2016.
Tullow noted that operating costs for Jubilee field in Ghana averaged $10/bbl in 2014 while gross production averaged 102,000 b/d.
In East Africa, the South Lokichar basin exploration and appraisal program continues with drilling recently completed at the Ngamia-5 and Ngamia-6 wells. Beyond South Lokichar, results from the Epir-1 well are expected later this month.
The company said it is entering discussions with partners and suppliers regarding potential savings as industry costs decline.