Tullow Oil share price: Explorer to concentrate on producing assets

on Nov 12, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Wednesday, November 12: Tullow Oil (LON:TLW) will concentrate its investment focus on its producing assets next year, the Africa-focused explorer has said. The company today also said that it was reviewing its capital expenditure and cost base following the recent falls in oil prices.

Tullow Oil’s share price has reacted positively to the news, having added 1.51 percent to 489.50p as of 08:38 GMT and outperforming the benchmark FTSE 100 index which currently stands 0.31 percent lower at 6,606.82 points.
*h*Interim statement*h*
Tullow Oil said this morning in a statement that a review of its portfolio had indicated that the group should re-allocate capital across the business towards producing assets and the commercialisation of existing discoveries. 

The company explained that while exploration would continue to be a key part of its growth strategy, the current expectations for the oil price as well as reduced commercial success from offshore drilling meant that deepwater wells were currently less attractive. Tullow Oil now expects to focus the majority of its exploration and appraisal expenditure on its operated onshore East Africa portfolio.

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“”In light of current oil and gas sector challenges including the commodity price environment, we are reviewing our capital expenditure””
“In light of current oil and gas sector challenges including the commodity price environment, we are reviewing our capital expenditure and our cost base to ensure that Tullow is well-positioned for future success,” Tullow Oil’s chief executive Adrian Heavey commented in today’s statement, adding that the group’s “overall exploration spend will be significantly reduced”.

The company pointed out that it was in the process of reviewing its three-year investment plan with French Guiana and Mauritania being the main areas of focus. Tullow Oil warned that if it decided not to invest in those areas, it expected substantial non-cash exploration writedowns for the full year. 
Today’s results come after in July, the FTSE 100 explorer booked a $415 million (£242 million) write-off for the first half of the year following exploration setbacks in Mauritania, Ethiopia and Norway. (Tullow Oil share price: Explorer writes off $415m of exploration costs)

Tullow noted in today’s statement that its financial performance for the year to date was in line with expectations, before exploration write-offs and impairment charges. The company reiterated its full-year production guidance for West Africa, but flagged lower output from its European operations.
*h*Analysts on Tullow Oil*h*
As of November 8, the consensus forecast amongst 48 polled investment analysts covering Tullow Oil for the Financial Times has it that the company will outperform the market.
Analyst Ratings Network reports that the FTSE 100 oil explorer currently has a consensus ‘buy’ rating and an average price target of 939.92p.
**As of 08:44 GMT, buy Tullow Oil shares at 488.30p.**
**As of 08:44 GMT, sell Tullow Oil shares at 487.90p.**


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