The just released 2020 half year results indicate that the oil and gas exploration and production company, Tullow Oil plc posted $2.7 billion loss in 2020.
The losses have been alluded to the various write-offs in Uganda and other countries. The company registered $731 million revenue, $164 million gross profit, loss after tax of $1.3 billion and Loss after tax driven by exploration write-offs and impairments totaling $1.4 billion pre-tax. By 30 June, the company had a net debt of $3.0 billion, liquidity headroom and free cash of $0.5 billion
During the first half of 2020 the Group recorded exploration write-off costs of $941 million which are predominantly driven by a write-down of the value of the Ugandan assets to the value of the disposal consideration as well as a write down to the value of the Kenya assets, principally associated with the reduction of the Group’s long-term oil price assumption and anticipated delay in FID. The remaining write-offs include Marina-1 well costs in Peru and the write-off of licence level costs associated with Peru, Comoros, Côte d’Ivoire and Namibia due to lower levels of planned activity and licence exits.
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.
On 23 April 2020, the Company announced that it had signed a Sale and Purchase Agreement with Total Uganda with an effective date of 1 January 2020, in which it agreed to transfer its entire interests in Blocks 1, 1A, 2 and 3A in Uganda and the proposed East African Crude Oil Pipeline (EACOP) System to Total.
The consideration is structured as $575 million in cash, consisting of $500 million on completion of the Transaction and $75 million following FID of the Lake Albert Development project, plus contingent post first oil payments.
Commenting about the half year results,  the Chief Executive Officer, Tullow Oil plc, Rahul Dhir said: “Despite the very tough conditions in the first half of this year, we have successfully delivered reliable production and major, sustainable reductions to our cost base. We are also close to completing the important sale of our interests in Uganda. The quality of Tullow’s assets remains robust.” He said.
He said that since his arrival as CEO, they have been developing new plans for their business, with the support of our Joint Venture Partners and expert advisors. The plans will deliver enhanced value from their assets to benefit all their stakeholders including our host countries and investors. “We will host a Capital Markets Day towards the end of 2020 at which we will update the market on these plans to deliver on Tullow’s true potential.”
The company registered significant progress in the rest of the countries which include Ghana and Ivory Coast.
By 30 June, the Total Group working interest production averaged 77,700 boepd (1H 2019: 86,300 boepd), a decrease of 10% for the period. The realised oil price after hedging for the period was $51.8/bbl (1H 2019: $64.3/bbl) and before hedging $42.5/bbl (1H 2019: $66.7/bbl).
The impact of COVID-19 pandemic on global oil demand resulted in significant discounts to the Dated Brent benchmark oil price for the cargoes sold during April and May 2020. Low oil prices led to a gain on the realisation of commodity hedges, increasing total revenue by $130.8 million (1H 2019: loss of $32.6 million).
