Tullow oil, an independent oil and gas explorer and producer focused mainly on Africa, has today reported loss after tax of $1.64 billion for the full year 2014, versus a profit of $216 million in 2013.
The group said its revenues fell 16% to $2.2 billion due to oil price decline in the second half of the year.
Explaining the loss after tax, Tullow said it was due to significant write-offs, impairment charges and a loss relating to the Uganda farm-down.
Capital expenditure in 2014 amounted to $2.0 billion up from $1.8 billion in 2013, with $1.2 billion spent on development activities and $0.8 billion on exploration and appraisal activities.
As for the expected expenditure this year, Tullow said it should spend around $1.9 billion, of which only $200 million on exploration and appraisal. It said that review of cost base and efficiencies is expected to deliver cash savings of around $500 million over the next three years which will be realized through reductions in capital expenditure, operating costs and administrative expenses.
The company has said that in view of current capital allocation priorities, its Board is recommending that no final dividend be paid this year, bringing the full year 2014 dividend to four pence per share.
The company’s statement reads: “At a time when Tullow is focusing on capital allocation, financial flexibility and cost reductions, the Board believes that Tullow and its shareholders are better served by investing these funds into the business.”
Aidan Heavey, CEO, said: “2014 was a difficult year for our industry and a challenging one for Tullow as our results today demonstrate. 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.”
“We have increased and diversified our sources of debt capital, reduced our exploration expenditure, implemented significant cost saving initiatives and we are suspending the dividend.These measures will provide us with substantial headroom and liquidity to deliver on our strategy.”