Tullow Oil has said it will be shrinking its 2015 exploration expenditure capital to just $200 million from $1 billion in 2014 as it takes steps to strengthen the business to adapt to current market conditions.
The company that has exploration and production licenses in West and East Africa adds it will further carry out a review of the business to streamline processes and improve efficiencies which will result in significant long-term cost savings.
The update corresponds with rumors of planned job cuts this week as the company cuts down on expenditure.
The exploration programme Tullow adds will predominately focus on a number of high-impact, low-cost exploration opportunities in East Africa where it has licenses in Kenya and Uganda.
“While this is a challenging time for our sector, Tullow is fortunate to benefit from world-class, low-cost and high-margin assets, strong and growing cash flows and a broad, diversified funding position,” says Tullow Oil CEO Aidan Heavey.
The capital that has been directed elsewhere according to Aidan will be re-allocated towards production assets and the commercialization of existing discoveries which generate significant value and near-term cash flow for the Group.
The company projects to make a $600 million gross profit in 2014 down from $1.4 billion in the previous year with revenues down $400 million to 2.2bn over the same period.
Meanwhile the company has announced that it continues with South Lokichar Exploration and Appraisal programme with drilling recently completed at the Ngamia-5 and Ngamia-6 wells. In addition, the Amosing wells are being prepared for the first Extended Well Test in Kenya.
Elsewhere in the Lokichar basin results are being awaited from the drilling of Epir-1 while the drilling of Engomo-1 well in the Turkana basin has commenced.
The maiden Lekep-1 well testing the Kerio Valley Basin, is expected to be drilled in the second half of 2015 along with multiple appraisal wells in South Lokichar as work progresses on the East Africa development plan.