Tullow shares tumble 2.3pc as firm writes down assets by $440m
SHARES in Tullow Oil dropped as much as 2.3pc yesterday after the company said it would take a write-down worth hundreds of millions of dollars on its portfolio when it presents its half-year results in three weeks' time.
The company with the most exploration licences in Africa led the FTSE 350 Oil and Gas Index lower after it said it would write down the value of its assets by $440m (€350.76m) during the first six months of 2012 and instead focus on a number of assets that are closer to production.
In a trading statement, Tullow said it had conducted a "thorough review" of its exploration assets had written down $40m of the carrying value of a discovery in Ghana as well as $160m of a discovery in Namibia where "progress towards commercialisation continues to be delayed".
Another discovery in Mauritania had its value reduced by $80m, while the balance-sheet worth of interests in Sierra Leone was reduced by $50m.
Some $80m in write-offs were taken on other activities in Sierra Leone, the Ivory Coast and Tanzania.
Despite the write-down, the Irish led company still expects to post record revenue of $1.15bn for H1.
With the reduction in asset values, the company intends to focus on developing discoveries off the coast of South America and in Kenya, as well as improving production in Uganda.
Kenya is expected to become the focus for Tullow in the near term, after making the first ever oil discovery in that country this year at the Ngamia-1 well. Tullow will bring in two additional rigs to ramp up exploration in 2013, said chief financial officer Ian Springett.
"It's absolutely a fantastic start as it exceeded our expectations and there's a lot more drilling to come," Mr Springett said.
Alongside its partner Africa Oil, Tullow is deploying two rigs in Kenya and one in Ethiopia this year after the Ngamia-1 well discovered more than 100 metres of light oil. Africa Oil say there is another 43 metres of oil at the site.
Company chief executive Aidan Heavey said his firm was "well placed for continued success over the remainder of the year".
Tullow closed Wednesday down 1.9pc at 1,502 pence.