29 Jun Tullow takes $600 million hit amid low oil prices
Africa-focused oil explorer and producer Tullow Oil (LSE:TLW) has booked a US$600 million impairment charge on its property and equipment assets, due to a continued slump in prices for crude.
The pre-tax, non-cash impairment charge was announced in its mid-year trading update, although the report forecasted a higher gross profit margin of $300 million, compared with $200 million from 2016.
However, Tullow has reduced its forecast spending for the year to $400 million, down from $900 million last year as the firm looks to return to growth in ‘tough market conditions’.
Oil prices slipped to 10-month lows of around $44.50 a barrel last week, under increasing pressure from rising supplies of US shale.
Newly-appointed chief executive Paul McDade said financial discipline and efficient capital allocation would be his primary focus in the short-to medium-term.
“Since I became CEO in April, I have reviewed our medium-term plans and remain satisfied that we are making the right investment decisions with regard to our producing, development and exploration portfolio,” said McDade.