Tullow shares slip after oil firm forecasts $1.5bn write-off

Shares in Tullow Oil slumped more than 15pc in afternoon trading yesterday after the company said it expected write-offs of $1.5bn (€1.35bn) in respect of last year.

This is primarily due to a fall in the group’s long-term oil price assumption from $75 a barrel to $65, and a reduction in reserves at its TEN project in Ghana.

In an operational update, Tullow said its oil production averaged 86,700 barrels per day in 2019, which was in line with expectations.

Full-year revenue for last year is expected to be around $1.7bn, while the company’s gross profit is expected to be circa $700m.

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Capital expenditure in 2019 was $490m.

Looking to this year, capital expenditure is expected to be around $350m, with an additional $100m expected to be spent on decommissioning activities. Tullow restated its production guidance of 70,000-80,000 barrels of oil per day for 2020.

Dorothy Thompson, chairman of Tullow, said: “The fundamentals of our business remain intact.

“Recent reserves audits demonstrate that we have a solid underlying reserves and resources base in west and east Africa, our producing assets continue to generate good cashflow, and we retain a high-quality exploration portfolio.”

Last year, in one day alone, shares in Tullow fell by 70pc after CEO Paul McDade quit and the company lowered its production forecasts.

Shares have recovered somewhat. However, they are still down more than 55pc since the start of December.

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