Tullow Oil Plc suspended its final dividend as low oil prices handed the explorer in Africa an annual loss.
The company reported a net loss of $1.56 billion for 2014, following a profit of $169 million a year before, after writing down assets, Tullow said in a statement. The loss was above the $1.17 billion average of 11 analyst estimates compiled by Bloomberg. The final dividend in 2013 was 8 pence a share.
“We have reset our business and are focusing our capital expenditure on high-quality, low-cost oil production in West Africa,” Chief Executive Officer Aidan Heavey said.
Heavey shot down the possibility of a takeover of the company, which has been trailed by such speculation since at least 2006. “The business is set for growth,” he said Wednesday by phone. “We have no interest in being taken over.”
Tullow dropped as much as 4.9 percent and was trading down 2.6 percent at 403.5 pence by 9 a.m. in London trading.
The company, among the most active explorers in Africa, said in January it wouldn’t drill any offshore exploration wells there this year. Tullow also cut its exploration budget to $200 million from $1 billion and said it expected to write off $1.2 billion for exploration in French Guiana, Mauritania and Norway. The company plans to save $500 million in the next three years.
Material Target
“The cost target is material and represents a statement of intent from management focused on ensuring Tullow remains a low-cost oil producer, developer and explorer,” James Hosie, an analyst at Barclays Plc, said in a note.
Tullow is just the latest oil company to cut budgets amid a plunge in crude prices to below $50 a barrel this year. BG Group Plc last week reported a record quarterly loss after writing down the value of assets. BP Plc reduced jobs in Angola, the North Sea and Azerbaijan to protect returns to investors.
Tullow will focus exploration on “basin-opening wells” in Kenya, Norway and Suriname, it said. The Jubilee field off Ghana is expected to produce about 100,000 barrels of oil a day this year and the TEN project is set to produce first oil in mid-2016. Operating costs in West Africa averaged $13 a barrel.
The company on Feb. 10 agreed to sell 40.5 percent of its Mauritanian Block C-3 for about $2.5 million and payment of past costs to Sterling Energy Plc. Tullow will remain the operator with a 49.5 percent stake. It also deferred a seismic program and a well in Madagascar to 2016.
Credit: Bloomberg