Thursday 12 March 2020 10:40 am

Tullow Oil swings axe at workforce after massive 2019 loss

Low cost oil exploration company Tullow has warned it will cut over a third of its workforce as it reported a pre-tax loss for 2019 and warned of “material uncertainty” over its future.

Tullow Oil unveiled a $1.7bn pre-tax loss in 2019, down from an $85m profit in 2018.

And volatility in the world oil markets saw Tullow Oil’s free cash flow fall 13 per cent to $355m (£272m) in 2019 from $411m in 2018. Tullow Oil said cash flow may only reach $50m to $75m this year based on an oil price of $50 per barrel.

Its dire set of results prompted its share price to tank 14 per cent to just 15.6p.

Read more: Oil rebounds after Black Monday price crash

“This has been an intense period for Tullow as we have worked hard on a thorough review of the business which has led to clear conclusions and decisive actions,” said executive chair Dorothy Thompson.

Total revenue dropped from $1.8bn to $1.6bn over the same period, a fall of 9.5 per cent.

Net debt also dropped from $3bn to $2.8bn but the $100m dividend was suspended.

Production for 2019 averaged 86,800 barrels of oil per day equivalent, a 3.6 per cent fall on the previous year.

Tullow put the loss down to exploration write-offs and impairments.

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Poor results come amid oil price pressure

Oil prices have been in freefall this week due to coronavirus and geopolitical turmoil.

Declared a pandemic yesterday, coronavirus has caused uncertainty over oil demand in the world economy.

Last week, Opecand Russia, known as Opec+, were unable to agree future levels of oil production.

This led to Saudi Arabia dramatically increasing oil supply, pushing prices to a low of $31 a barrel on Monday.

“Like many oil groups the damage the current oil downturn does will depend entirely on how long it lasts, said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“The group’s well hedged for the next year or so but after that it needs $45 oil to break even.”

“With Brent currently trading around $34 a barrel that will look a like way off,” he added.

Read more: Tullow Oil share price plummets 70 per cent as chief executive quits

The company is also in the process of hiring a new boss after Pat McDade, alongside exploration director Angus McCoss, stood down in December.

Going forward, Tullow is monitoring how coronavirus will affect its operations and said the lack of a UK/EU free trade deal could impact its staff who are EU nationals.