LONDON (Alliance News) - Tullow Oil PLC Wednesday said that its revenues and gross profits for the first half of 2014 are expected to be in line with expectations but that it will book a USD415 million exploration write-off charge after poor drill results in Mauritania, Ethiopia and Norway.
The FTSE 100 oil and gas exploration company said it expects to post roughly USD1.3 billion in revenues for the six months ended June 30, a figure which is flat on the previous year, and USD650 million in gross profits, a reduction of 15% from USD764 million in the first half 2013.
Tullow Oil 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 expects a net exploration write off of USD450 million for the first half of the year.
The company said its average production rates were down 12% to 78,100 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.
However, despite disappointing results from these basins, the explorer maintained its full-year production guidance of 79,000 to 85,000 barrels of oil equivalent per day after stating that Gabon licence discussions are expected to be solved in the second half.
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.
"With potential basin-opening wells across the portfolio coming up in the second half of the year and strong revenue and cash flow, Tullow is in a strong position for the remainder of this year and into 2015," Chief Executive Aidan Heavey said in a statement.
The company said that it is also 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 the process of reducing its stake in the TEN Project in Ghana is ongoing.
Tullow Oil added that following a USD650 bond issuance in April, financings of 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.