Tullow shaves 2016 capex by 35%; TEN project remains on schedule

Tullow Oil PLC, London, expects capital expenditures during 2016 of $1.1 billion, and says work is ongoing to potentially reduce it further to $900 million. The company spent $1.7 billion in 2015 and $2.2 billion in 2014.

The firm in 2015 booked an aftertax loss of $1.04 billion, down from $1.64 billion in 2014, citing write-offs and impairment charges impacted by the decline in crude oil prices.  

If low oil prices persist, Tullow says it will have the ability to reduce group annual capex to $300 million from 2017 forward given that the capital intensive period of the TEN project offshore Ghana has been completed.

The 2016 capex program comprises $600 million for the TEN project, 75% of which is to be invested in the first half of 2016 and $400 million for other production and development activities.

Exploration capex will be about $100 million in 2016, with a focus on seismic surveying, processing, and interpretation.

TEN to boost 2016 operations

The TEN project is currently more than 85% complete, which includes the sailaway of the floating production, storage, and offloading vessel from Singapore on Jan. 23.

The Greater Jubilee Full Field Development (GJFFD) plan, submitted to the government of Ghana in December, has been redesigned to reduce the overall capital requirement and allow flexibility in the timing of the investment, Tullow says.

In East Africa, a draft field development plan was submitted to the government of Kenya in December, which Tullow says will inform discussions as the firm and its partners progress toward a potential final investment decision of both the Kenya and Uganda upstream development projects.

West Africa working interest oil production in 2015 averaged 66,600 bo/d. In Europe, gas production averaged 6,800 boe/d during the year.

Tullow’s average working interest production guidance for 2016 from West Africa and Europe is 73,000-80,000 bo/d and 5,000-7,000 boe/d, respectively, including second-half output from TEN as it gradually ramps up.

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