Tullow Oil has said it is discussing redundancies with employees as the energy explorer in Africa seeks to cut costs amid low oil prices.
“Tullow confirms that it has begun a period of consultation with its employees as part of a group-wide programme to increase efficiency and reduce costs in light of current industry conditions,” George Cazenove, a spokesman for the firm, said yesterday.
The Irish-founded company last month reported a net loss of $1.6bn (€1.5bn) for 2014 and suspended its dividend as crude slumped to near a six-year low.
The company, which has about 2,040 employees including some contractors, plans to cut costs by $50m over the next three years. About half of Tullow’s workforce is operating in Africa.
The stock gained as much as 6.7% and was up 5.3% in afternoon trading in London, yesterday. That pared this year’s decline to 28%.
Tullow does not plan to drill any offshore wells this year and is embroiled in a border dispute at its Tweneboa-Enyenra-Ntomme project in Ghana. Legal advisers say the maritime boundary disputed by neighbouring Ivory Coast will be upheld, the company has said. The project is set to produce its first oil next year.
While the company has trimmed its exploration budget to $200m from $1bn, it has not stopped looking for projects. Along with Total of France and China’s Cnooc, Tullow expects to invest as much as $14bn developing oil fields in Uganda.
On the back of disappointing results last month, the company’s senior management said it was hopeful the business will return to profit this year. The 2014 loss was its first in 15 years.
The company has hedged against oil price volatility for the next three years and CEO, Aidan Heavey said last month the firm is “ahead of the curve” in terms of re-setting its position amidst the new oil price environment, with it well-placed for recovery and growth.
“These measures will provide us with substantial headroom and liquidity to deliver on our strategy,” said management. “The TEN project, which remains on track, will increase our net West Africa oil production to over 100,000 barrels of oil per day by the end of 2016, generating substantial cash flows and placing Tullow in a strong position when the sector recovers.”
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