“As we approach the end of the year, we are focused on our priorities of generating steady cashflow form our operations,

Tullow to cut spending in 2016

UK

LONDON, November 11, 2015 – Africa-focused oil producer Tullow Oil expects to cut its capital expenditure from $1.9 billion in fiscal year 2015/16 to $1.2 billion the following year, in yet another indication of industry expectations for low oil prices in the medium term.

The company announced Wednesday that it has farmed out 20 percent of a 50-percent share of its operated block 54 off Suriname to US-based Noble Energy. It has also offloaded 25 percent of its 65-percent interest in block 12A in Kenya.

 

“While 2015 has been a difficult year across the industry, we have taken appropriate steps within our business to meet the challenges presented by lower oil prices,” Aiden Heavey, CEO of Tullow Oil, was reported as saying by the Financial Times.

The company’s shares rallied on Monday, after Danish operator Maersk Oil announced it would devote $845 million towards a series of oil assets in Africa, in which Tullow Oil also holds shares. Tullow Oil has also said its Tweneboa, Enyenra and Ntomme project in Ghana remains on track, with first oil from the $4.5-billion development scheduled for mid-2016. Meanwhile, in October, the company regained a licence to drill in Gabon, after having been blocked for 18 months by the country’s government.

Still, there are wider concerns that hydrocarbons assets may be determined to be less valuable in the climate of depressed oil prices. This has the potential to initiate immediate debt repayments. Tullow Oil recently agreed on new terms with lenders that safeguard continued access to $3.7 billion of debt.

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