Tullow reports wider-than-expected loss after taking writedowns

Tullow Oil Plc, a U.K. explorer focused on Africa, reported a wider-than-expected full-year loss as tumbling crude prices forced the company to record writedowns.

The net loss was $1.03 billion in 2015, the London-based company said Wednesday in a statement. That compares with the $787.9 million average estimate of seven analysts surveyed by Bloomberg, and a loss of $1.56 billion a year earlier. The board recommended no dividend be paid.

Tullow wrote off $749 million in exploration costs and took an impairment charge of $406 million and a service-contract charge of $186 million. The company, like its peers, has cut spending and jobs to weather a prolonged decline in prices amid a global oversupply. Its shares have lost almost two-thirds of their value in the past year.

Tullow reiterated its intention to cut capital spending to $900 million this year from an original forecast of $1.1 billion. The company is able to reduce that to $300 million next year should low oil prices persist, it said. Its hedging program was valued at $668 million as of Jan. 31, according to the statement.

The oil producer “significantly cut costs across the group and benefited from our strong hedging position,” Chief Executive Officer Aidan Heavey said. “Our challenge in 2016 is to be equally robust in responding to the uncertainties that remain in the sector.”

 – Bloomberg