Tullow Oil boss Heavey predicts oil price will hit $75 a barrel by year end
Tullow Oil boss Aidan Heavey has predicted that oil prices will level off about $75 a barrel this year but insisted the industry can still make money if prices were to keep falling.
"The oil industry is very robust. We've made money at $20 a barrel, at $15 and at $30," the told the Irish Independent. "The industry is geared towards adjusting itself, whatever the oil environment is."
He was speaking as Tullow Oil announced that first-half results that were broadly in line with expectations, as revenue fell 35pc to $820m and pre-tax losses narrowed to $10m from $29m. Its net loss was $68m - much better than analysts expected. It was helped by lower exploration write-downs. It will spend a total of between $200m and $250m this year on exploration. Tullow, whose primary operational focus is in Africa, has been re-engineering its business in light of the oil price slump. It's cutting $500m (€453m) in costs over the next three years and has reduced staff numbers.
The price of Brent Crude - an industry benchmark - has fallen about 50pc in the past year and is now hovering around $50 a barrel. Shares in Tullow have fallen about 70pc in the same period, raising speculation that it could become a takeover target.
"The problem today is that you don't have a stabilised commodity prices worldwide," said Mr Heavey.
"Unless you get stability in there, companies like ourselves do exactly what we have just done and reset the business to be competitive in a low oil price environment."
He said Tullow's first-half results don't reflect the impact of its cost cutting, which will become more fully evident in the current half and next year.
"We have completed a major cost-cutting exercise and restructured our financial facilities. We've focused on the really high margin-producing assets and hedged them to secure them," he added.
Tullow's main asset is the Jubilee field off Ghana, where it's also progressing another major offshore project due to come on stream in 2016. Tullow is active in countries including Kenya.