Tullow Oil PLC will report $1.5 billion worth of write-offs mainly related to the company's lowered oil price assumption and reduced reserves at its exploration projects offshore Ghana.
Of the total pretax impairments and exploration write-offs, $700 million falls under Tullow's impairments of property, plant and equipment, while the remaining $800 million is for the company's exploration costs due to a write-down of the value of its Kenya and Uganda assets, according to a Jan. 15 news release. The write-offs also include well costs in three of the producer's wells in Guyana and other project license costs.
The write-downs came after Tullow decreased its long-term accounting oil price assumption to $65 per barrel, from $75/bbl. Tullow also reported a reduction in proved and probable reserves at the Tweneboa, Enyenra and Ntomme fields offshore Ghana.
Tullow recently said the volume of its latest oil discovery in Guyana was lower than forecast, causing the company's shares to plunge at the beginning of the year.
Tullow in December 2019 also slashed its 2020 average production guidance to a range of 70,000 barrels of oil per day to 80,000 bbl/d amid some changes to its board and executive leadership, including the resignation of CEO Paul McDade. The producer also said it will reduce capital expenditures, operating costs and corporate overhead to help deliver sustainable free cash flow.