Tullow forced to write off £1.45bn

AFRICA-focused Tullow Oil was the latest blue-chip explorer to reveal the impact of the tumbling oil price as it said yesterday it would have to write off £1.45bn.

And BP has announced 300 jobs are to go as it became the latest casualty of the price dip.

Ahead of its full-year results next month Tullow revealed it will change strategy to focus on assets that actual produce oil, and cut back on exploring for new wells.

Chief executive Aidan Heavey said: ‘In late 2014, we materially reduced our 2015 exploration capital expenditure and today announce a further cut to this expenditure to $200m.’

It will switch its focus to ‘highmargin oil production in West Africa’ and step this up to around 100,000 barrels a day by the end of next year to generate stable, long-term cash flows.

Tullow’s write-down will include around £400m from its assets as well as £800m for exploration and appraisals of potential wells that it will abandon.

The announcement followed Premier Oil which said on Wednesday it will write off £200m for its 2014 financial year and postpone its £1.3bn Sea Lion project in the Falkland Islands.

The price of Brent crude steadied yesterday at around $48 a barrel but analysts at Bank of America Merrill Lynch predicted that it could tumble as low $31 by April.

Tullow’s plan, in the face of an oil price that is down around 55pc since June, comes as oil major BP announced job cuts.

Staff have been told 200 onshore staff and 100 contractor roles in the North Sea will go.

But BP said it remained committed to the North Sea region, which makes up about 5-7pc of its production and where it employs around 3,500 staff.

It has two new projects in the region – Quad 204 and Clair, both to the west of Shetland Isles.

Tullow shares are down more than 50pc compared to a year ago and 14pc since the start of the year. It fell 3p to 354.9p yesterday.

BP rose 10.45p to 392.6p.