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Tullow shuns further deepwater development as oil prices plummet

12th November 2014

Tullow Oil has reviewed its exploration and production strategy in the light of the current oil price slump and is to avoid further costly and ‘less attractive’ deepwater fields

Tullow shuns further deepwater developments as oil prices plummet
In 2015, Tullow expects to reduce net exploration and appraisal capital expenditure to around USD 300m after the Norway tax rebate

“In light of current oil and gas sector challenges including the commodity price environment, we are reviewing our capital expenditure and our cost base to ensure that Tullow is well-positioned for future success,” said Aidan Heavey, Tullow chief executive officer.

The report stated that Tullow would avoid further acquisition of deepwater acreage due to the current slump in oil prices making such projects unfeasible from start-up.

The group’s core oil assets in West Africa – the TEN development project, Jubilee production and the non-operated West Africa portfolio – will generate significant value and cash flow for the group and will attract the greatest share of capital in 2015

“In 2015, we will be focusing our capital spend on producing and development assets, particularly in West Africa where, by 2017, the group expects to be producing, net to Tullow, over 100,000 bpd of high quality, high margin oil.

Tullow will focus the majority of its exploration and appraisal expenditure on its operated onshore East Africa portfolio where significant value can be created by adding further resources and appraising existing discoveries to progress development in both Uganda and Kenya

“Our overall exploration spend will be significantly reduced and will focus primarily on East Africa where we have major basin-opening potential.

In 2015, Tullow expects to reduce net exploration and appraisal capital expenditure to around USD 300m after the Norway tax rebate.

During the year, Tullow will continue to seek new low cost and highly prospective exploration acreage in its core areas of Africa and the Atlantic Margins to ensure that the business continues to have an industry-leading exploration position

“Tullow remains exploration-led and will continue to add further high quality frontier acreage so that, as conditions allow, we can return to drilling the types of prospects that have given us the development portfolio we have today."

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