Tullow Oil reported a pre-tax loss and plans to cut more than a third of its workforce after warning of “material uncertainty” about its ability to operate as a going concern.
The struggling FTSE 250 oil and gas explorer, which warned in January of a $1.5bn writedown, swung to a pre-tax loss of $1.7bn in 2019, from a profit of $85m. The full-year loss was driven by exploration write-offs and impairments totalling about $2bn, including a revised write-off from its assets in Uganda. It generated free cash flow of $355m on revenues of $1.7bn.
Tullow warned of “unprecedented market conditions with significant oil price volatility” caused by the coronavirus crisis and by the oil price war exacerbated this week by Saudi Arabia and Russia. Brent crude oil prices have shed about a quarter of their value this week.
Tullow will cut jobs by 35 per cent and plans to suspend its dividend, a measure announced last year. It will seek to raise $1bn from portfolio management activities, the company said in its full-year statement on Thursday.
Shares in Tullow fell 17 per cent in early London trading. Brent crude dropped nearly 4 per cent.
The fallout from the coronavirus pandemic and the oil price war means the company might not be able to carry out any portfolio management activities successfully, it said, and lenders may not approve reserve-based lending liquidity assessments or covenant amendments if they are required.
Group production for 2020 was in line with expectations to date, said Tullow, adding it targets 70,000-80,000 barrels of oil a day for the year.
