Tullow Oil Plc recorded US$1.4 billion in impairment charges and exploration write-offs at June 30, 2020, leading to a US$1.3 billion loss after tax, compared with a $103 million profit last year, it reported this week.
The company has warned of the possibility of defaulting on a debt facility if it does not resolve a potential liquidity shortfall challenges. Net debt at June, 30, 2020 stood at US$3.0 billion.
Group working interest production for the first half of 2020 averaged 77,700 barrels of oil per day (bopd).
The company which recorded revenue of US$731 million saw gross profit of $164 million; and loss after tax of $1.3 billion.
The loss after tax was driven by exploration write-offs and impairments totalling $1.4 billion pre-tax.
The company said it has gained the approval from shareholders for sale of Ugandan assets for $500 million in cash on completion and $75 million in cash.
The company reports that in February 2020, it concluded a business review which included a review of organisation structure and resources.
This will result in a 50 per cent reduction in headcount, with an associated restructuring cost of $59 million provided for in the first half of 2020 for redundancy and onerous office lease payments.
It is anticipated that the reorganisation will generate cash and savings of over US$350 million aggregate over the next three years, management said.
In the Latin American and Caribbean region, Tullow has now exited the Walton-Morant licence in Jamaica which expired on July 31, 2020. Its major projects are in Africa.
It also reported that new exploration acreage was secured in Peru; data reprocessing and evaluation continues in Guyana; and that drilling is planned for Suriname, planned for first quarter of 2021
The international company stated in reports released this month that it retains a high-quality exploration portfolio in both Africa and South America with high-potential opportunities.
However, management said, in light of the challenging external environment, the company will be minimising exploration spend in the short term and looking at ways to rebalance the portfolio whilst maintaining opportunities to realise value and preserve longer term options for growth.
In Suriname, the Goliathberg-Voltzberg North well in Block 47 is now planned to be drilled in the first quarter of 2021, testing dual targets in the Cretaceous turbidite play in approximately 1,900 metres of water.
Seismic acquisition in Argentina commenced in the fourth quarter of 2019 and was able to continue until May 2020 before being put on hold due to the impact of the COVID-19 pandemic.