30th Jul 2014 07:58
LONDON (Alliance News) - Tullow Oil PLC Wednesday said it swung to a pretax loss in its first half as revenues fell, hit by exploration write-off charges it had warned about earlier this month.
Earlier in July, the FTSE 100 oil and gas exploration company said it expected gross profits for the six months ended June 30 to fall, noting at the time that it will book major exploration write-off charge after poor drill results in Mauritania, Ethiopia and Norway.
On Wednesday, the company said its revenue for the half fell 6% to USD1.27 billion compared to the previous year, and its gross profit fell 12% to USD673 million, a slightly smaller fall than expected. It posted a pretax loss of USD29 million compared with a pretax profit of USD486 million previously.
Tullow Oil maintained its interim dividend at 4.0 pence per share.
As expected, the company said that after mixed exploration results during the period, along with the relinquishments of certain licences as the company focused on its high-grade assets, it booked a USD402 million net exploration write off charge during the period.
Tullow Oil said its revenues fell principally due to a 7% decrease in sales volumes relating to the 2013 disposal of Tullow Bangladesh and certain Gabon assets for which Tullow did not receive any sales volumes in 2014.
The company said earlier in July that its average production rates for the six months were down 12% to 78,400 barrels of oil equivalent per day from 88,600 barrels per day previously, as it saw under-performance at its Schooner-11 site in the UK North Sea and as certain non-operated production from its Gabon interests was not booked due to ongoing licence discussions.
On Wednesday, Tullow maintained its full-year guidance for the West African region at 64,000 to 68,000 barrels of oil equivalent per day but revised down its European gas production rates to 13,000 to 14,000 barrels of oil equivalent per day after worse production than expected at its Schooner Field.
Tullow said its exploration activities in the second half will continue to focus on the South Lokichar Basin in Kenya, where there have been a number of successful oil finds and strong test results, while it should continue to achieve a steady stream of production from its Jubilee oil field in Ghana.
The company said earlier in July that it was making progress on its asset-disposal programme after signing an agreement to sell 53.1% of its Schooner unit interest and 60% of its Ketch asset in the UK Southern North Sea to Faroe Petroleum Ltd in April, along with recent deals to sell assets in Bangladesh and Pakistan. The company said on Wednesday that the process of reducing its stake in the TEN Project in Ghana is ongoing.
Tullow Oil added that with a USD650 bond issuance in April, its corporate revolving credit facility of USD750 million, and a USD3 billion Norwegian exploration loan facility, its balance sheet is well-funded, and the firm has unused debt capacity of roughly USD2.3 billion at the end of June.
"With strong revenues and cash-flow from our existing production and a well funded and diverse balance sheet, Tullow is well placed for the remainder of this year and into 2015," Chief Executive Aidan Heavey said in a statement.
Tullow Oil shares were down 0.6% to 759.50 pence during early trading on Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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