Oil and gas producer Tullow Oil (LSE: TLW.L – news) reported a $415 million pretax write-off in net exploration in the first half of 2014 after disappointing results in Mauritania, Ethiopia and Norway. The energy company is now counting on new drilling projects planned in Kenya and Ethiopia for this year and next to improve its exploration performance.
Despite poor drilling results in some areas, the Africa-focused explorer maintained its full-year production guidance of 79,000-85,000 barrels of oil equivalent per day.
Tullow also said production at its flagship Jubilee oil field in Ghana was expected to remain at 100,000 barrels of oil per day, while its TEN project in Ghana was on track for first oil deliveries in mid-2016.
Dry holes drilled in Mauritania, Ethiopia and Norway over the past 6 months and various licence cancellations forced Tullow to report the write-off in the first half of the year, amounting to $305 million after tax. It also expects a loss on disposals of $115 million over the same period.
“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,” said Chief Executive Aidan Heavey.
The company said gross first-half profit came to $650 million and revenue reached $1.3 billion, in line with the firm’s expectations for the year. Heavy also said Tullow’s asset disposal programme was making steady progress, with further deals expected to divest its remaining UK and Dutch North Sea portfolio.
Tullow sold some of its assets in the area to Faroe Petroleum in April for $75.6 million after struggling to attract buyers over the previous 18 months.