Business

Tullow Oil slumps to £1bn loss

oil rig Image copyright Getty Images

Oil and gas exploration firm Tullow Oil has reported a pre-tax loss of £1.3bn for the year to 31 December as low oil prices bit into revenues.

The oil firm said revenues in the year fell 27% to £1.6bn as the price of oil continued to fall in 2015.

It is the second year in a row the oil company has reported a loss. In 2014, it reported a loss of £2bn.

Tullow also warned there was a risk it could fail to comply with its financial covenants this year.

Financial covenants are agreements that companies make with their lenders to maintain a stable financial position.

Oil prices have slumped by 70% since the middle of 2014, with many of the oil majors cutting back investment on exploration and production.

That has also led to the loss of more than 5,000 jobs in the North Sea oil industry.

Tullow said it could cut annual capital expenditure to as low as $300m in 2017, down from $1.1bn planned for 2016, if market conditions did not improve.

The firm said it had reduced headcount of 37% and was on track to deliver cash savings of around $500m over three years.

It also said it would pay no dividend in 2015.

Tullow Oil chief executive Aidan Heavey said: "Our challenge in 2016 is to be equally robust in responding to the uncertainties that remain in the sector."

He added: ". As we look ahead, we have a portfolio of world class, low cost oil assets which will produce around 100,000 barrels per day in 2017 and a major position in one of the world's newest, low cost, oil provinces in East Africa, both enabling us to create substantial value."

More on this story