Tullow Oil may make write downs as it moves away from exploration and focuses on East Africa projects
Tullow Oil has announced plans to tighten expenditure next year, and it warned investors that it may make a series of writedowns, amid tumbling global oil prices.
The oil and gas producer said it will shift its focus away from exploration and towards maximising core assets. In particular, it will looking at the potential of existing projects in East Africa. It also said that the review will focus mainly on French Guiana.
Our overall exploration spend will be significantly reduced and will focus primarily on East Africa where we have major basin-opening potential
However it said that this could dent future profits, as the company said it would need to make future writedowns.
While significant upside potential exists, if the Board decides not to allocate near-term capital to these areas, substantial non-cash exploration write downs will be required for the Full Year
Tullow Oil was up 2.2 percent in early morning trade.