Africa-focused Tullow Oil has had announced it has written off billions of dollars of exploration work and assets.
Tullow has written off $2.3bn and expects to cut its capital expenditure to $1.9bn. This means a downsizing of the exploration budget by $200m.
Why it's interesting
Oil companies are having a rough time at the moment as the price of the price of their product continues its dramatic slide. Tullow rival Premier Oil reported yesterday it will be hit with a $300m impairment charge and expects development spending to be 40 per cent lower than last year.
Falling oil prices are good for consumers and the wider economy, but have a negative effect on oil exploration, production and potential future oil exports.
Tullow has suffered significantly in the last three months with a share price drop of 31 per cent. Significant spending on drilling and exploration over the last two years is being reduced substantially.
What Tullow said
Commenting on today's announcement, chief executive Aidan Heavey said:
While this is a challenging time for our sector, Tullow is fortunate to benefit from world-class, low cost and high-margin assets, strong and growing cash flows and a broad, diversified funding position
Tullow Oil is as vulnerable to the falling price of the black stuff as any other oil producer. The company expects to report revenues of $2.2bn, gross profit of $600m and pre-tax operating cash flow of $1.5bn.