Tullow Oil plc has registered a financial loss of $2.0 billion following exploration write-offs and impairments in Uganda and other countries.
In August 2019, Tullow announced that its farm-down to Total and CNOOC lapsed following the expiry of the Sale and Purchase Agreements (SPAs). The expiry of the transaction was a result of being unable to agree all on aspects of the tax treatment of the transaction with the government of Uganda which was a condition precedent to completing the SPAs.
According to full year results ended December 31, 2019, the oil company registered a year-end net debt of $2.8 billion and loss after tax of $1,694 million.
The Group working interest production averaged 86,800 barrels of oil equivalent per day (BOEPD), capital investment of $490 million. The company registered revenue of $1,683 million and gross profit of $759 million.
According to Dorothy Thompson, Executive Chair, Tullow Oil plc, this has been an intense period for Tullow as we have worked hard on a thorough review of the business which has led to clear conclusions and decisive actions.
“We are focused on delivering reliable production, lowering our cost base and managing our portfolio to reduce our debt and strengthen our balance sheet. Even with recent events in oil markets, Tullow’s assets remain robust: we are a low-cost African oil producer, with a strong hedging position, substantial reserves that underpin our business and a high potential exploration portfolio.” She said
“Tullow remains committed to reducing its equity in the project ahead of FID and is working constructively with the Joint Venture Partners and the government of Uganda to agree a way forward.”
The planned development of Uganda’s material oil resources remains at an advanced stage, with the project’s major technical aspects completed. For the upstream components of the project, the ESIA Certificate was awarded for the Tilenga Project, and the final ESIA report has been submitted for the Kingfisher Project.
The company noted that progress has been made on land access secured for both upstream projects and construction costs and schedules have been confirmed from the main EPC bid submissions. For the East Africa Crude Oil Pipeline (EACOP) project, the ESIA certificate has been awarded in Tanzania, and the final ESIA report has been submitted to the Government of Uganda. The key project legal and commercial prerequisites have been outlined to Government by the Joint Venture Partners, with the schedule to FID now dependent on the progress of these negotiations.