Tullow Oil faces challenges
LONDON, February 12, 2015 – London-based exploration company Tullow Oil has frozen its dividend for the first time. Tullow identified $500 million in planned cost savings over the next three years to balance 2014 pretax losses of $2 billion. This was the first loss experienced by the company in 15 years and is a result of decreasing oil prices and unsuccessful exploratory drilling.
Tullow will refocus its business strategy on high-quality, low-cost oil projects in West Africa. One such project, the $4.9 billion Ghana TEN development, is expected to come onstream in mid-2016. The company has the financial means to bring the project into production and will not need to raise additional funds.
“Unfortunately dividends are a luxury and you need that [financial] headroom. We took a decision to reset the business and streamline it to work at a lower oil price,” The Wall Street Journal quoted chief executive Aidan Heavey as saying.