11th Feb 2015 07:45
LONDON (Alliance News) - Tullow Oil PLC Wednesday said it swung to a pretax loss in 2014 after booking significant impairment charges, which - combined with falling production and revenue - caused the FTSE 100 oil exploration and production company to suspend its final dividend for the year.
Tullow swung to a USD2.04 billion pretax loss for 2014 from a USD313 million pretax profit in 2013. The loss was caused by impairment charges and losses on the company's disposal of assets, as well as lower revenue and production.
Exploration cost write-offs for 2014 totalled USD1.65 billion whilst impairment of property, plant and equipment reached USD596 million. Tullow also booked a USD482 million loss on disposal of assets and a USD133 million charge on goodwill impairment.
Revenue for 2014 fell by 16% year on year to USD2.21 billion from USD2.64 billion in 2013, and the company's gross profit totalled USD1.09 billion, down from USD1.40 billion a year earlier.
"In view of the fall in the oil price, the board are suspending the final dividend. 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.
As a result, shareholders will receive a full-year dividend per share of 4.0 pence, significantly down from the 12.0 pence paid in 2013.
The company also reduced its capital expenditure budget for 2015 to USD1.9 billion, of which USD200 million will be spent on exploration activities. During 2014, Tullow's capital expenditure totalled USD2.0 billion.
As of December 31, 2014, Tullow had net debt of USD3.1 billion, with facility headroom and free cash of USD2.4 billion. A review of the company's cost base has been initiated which is expected to deliver cash savings of around USD500 million over the next three years, Tullow said. The savings will be realised through reductions in capital expenditure, operating costs and administrative expenses, it said.
Production attributable to Tullow fell by 11% year on year to 75,200 barrels of oil equivalent per day from 84,200 barrels of oil equivalent per day in 2013, primarily due to the company's disposal of its assets in Bangladesh during 2013, it said.
By Joshua Warner; [email protected]; @JoshAlliance
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