Tullow Oil has not ruled out laying off some of the 140 staff at its Irish office as the exploration and production group moves to cut jobs as part of its efforts to stave off the impact of falling hydrocarbon prices.
The continued slide in prices, which has seen oil fall below $50 a barrel in recent days, prompted Tullow to write off about €2 billion against exploration work and the value of some of its assets in 2014. It also confirmed job cuts are likely to result from an internal review designed to deliver “long-term cost savings and efficiencies” across the exploration group.
Tullow did not rule out cutting numbers at its Irish office. It said “the review is yet to be carried out and no final decision has been made” and it would provide further information when it publishes its full-year results on February 11th.
It employs about 140 people at its offices in Leopardstown in south Dublin, which provides support for its oil exploration and production activities. Many of them are highly qualified specialists in fields such as geology and computer science.
The group is cutting spending on oil exploration back to $200 million this year from $900 million in 2014. Before prices began tumbling last autumn, it indicated it planned to spend $800 million to $900 million a year on searching for new sources of the fuel.
Instead, Tullow is going to focus on fields that are already producing oil, such as its interests off the coast of Ghana in west Africa, and on commercialising existing discoveries that generate value and cash flow for the business in the short term.
The group told investment markets in an interim management statement it now expects its 2015 capital spending to be $1.9 billion, versus an earlier $2 billion estimate. Tullow said in the same statement it expected to make a gross profit of $600 million for 2014, with revenue of $2.2 billion and pretax operating cash flow of $1.5 billion.
It expects to write off $1.2 billion against previously reported unsuccessful drilling operations in French Guiana, Mauritania and Norway. Total charges for the year are expected to be $2.3 billion.
The group, which is quoted on the Irish, London and Ghanaian stock exchanges, has interests in over 140 exploration and production licences across 24 countries. It said its ongoing hedging programme bolstered revenues last year. It realised of $97 a barrel for its oil in 2014.
