Exploration write-offs hit Tullow's bottom line
Oil and gas producer Tullow Oil reported a net loss for the first half of the year after writing off more than $400m in exploration costs.
The company reported a net loss of $95m for the six months ended June 30 compared with a net profit of $313m a year earlier.
Revenues fell 6pc to $1.265bn.
Tullow reported write-offs of $402m on drilling in Mauritania, Ethiopia and Norway over the past six months. It also had various licences cancelled.
The British energy company is now counting on drilling projects planned in Kenya and Ethiopia this year and next to improve its exploration performance.
Tullow said production fell 12pc in the first half to 78,400 barrels of oil equivalent per day (boepd), short of its full-year production guidance of 79,000-85,000 boepd.
Tullow's shares closed at 764 pence on Tuesday on the London Stock Exchange.
Production at its flagship offshore Jubilee oil field in Ghana averaged 103,000 barrels per day (bpd) in the first half of 2014, slightly above the group's full-year production goal. Tullow holds a 35.5 percent stake in the Jubilee field.
The TEN project in Ghana remained on course and on budget for first production in 2016 with plans to reach 80,000 bpd production capacity by 2017. Tullow said the project was now 30 percent complete and expected to cost $4.9bn.
In Kenya, Tullow has made oil discoveries in 9 of 11 wells in the Lokichar basin where it has raised discovered resources to 600 million barrels of oil. It plans to drill wells in three new onshore basins in the East African country.
"In the first half of 2014, Tullow made further important discoveries in Kenya and Norway and we have a concentrated exploration campaign planned for the next 18 months," Chief Executive Aidan Heavey said in a statement.
Oil discoveries in Uganda and Kenya and gas deposits found off Tanzania and Mozambique have turned east Africa into a hot spot for hydrocarbon exploration.
The governments of Kenya, Uganda and Rwanda have signed a Memorandum of Understanding (MoU) on the construction of a oil export pipeline from Uganda through Kenya.