Explorer Tullow Oil expects to report “material” impairments and exploration write-offs of between $1.4bn-$1.7bn (€1.2bn-€1.4bn) for the first half of the year.
his is as a result of lower near-term oil price forecasts, and a downward revision in the group’s long-term oil price assumption, it said.
The group has revised down its long-term oil price assumption to $60 a barrel from $65 per barrel.
Revenue for the first half of this year is expected to be circa $700m, with a realised oil price of $52 a barrel, according to a trading update.
At June 30, net debt is expected to be circa $3bn and liquidity headroom and free cash are expected to be around $500m. Full yearfree cash flow is forecast to break even at the current forward curve, the group said.
Capital and decommissioning expenditure guidance for the year remains unchanged at around $300m.
Rahul Dhir, CEO of Tullow Oil, said he is “confident” Tullow can be turned into a “competitive and successful business once again.”
“Despite the challenging external environment in the first half of the year, Tullow has performed well; delivering production in line with forecast, agreeing the sale of the Ugandan assets and re-shaping the group’s structure and cost base,” Mr Dhir said.
In the first half of this year the group’s working interest production averaged 77,700 barrels of oil per day, which was in line with expectations.
The group will release its half year results on September 9.