Tullow Oil sees stock fall again as drilling comes up dry
Tullow Oil’s shares fell six per cent this morning as the exploratory firm said that it would abandon one of its wells in Peru after failing to find oil while drilling there.
The well, of which Tullow owns a 35 per cent stake, was the first to be drilled in the offshore Tumbes basin, a focus for the London-listed firm’s activities in South America.
The failure to strike oil is yet another disappointment for the firm, whose stock has fallen more than 80 per cent in the last year after a series of difficulties.
Poor findings in offshore Guyana, problems with drilling in Ghana and operational delays in East Africa saw the firm cut its production guidance for 2020 in November.
This year’s production is predicted to average between 70,000 and 80,000 barrels of oil per day (bopd), while over the next three years it expects an average of 70,000 bopd.
Estimates for last year initially had output at 89,000 bopd.
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Tullow’s poor performance led to the resignation of chief executive Pat McDade, who quit along with exploration director Angus McCoss in December.
Subsequently the firm, which is being run in the meantime by executive chair Dorothy Thompson, booked a $1.5bn writedown on its outlook after lowering its long-term oil price outlook.
It is also set to cut a third of its workforce in order to save about $20m (£15.4m) on administrative costs as the firm fights back from November’s share price collapse.
The firm’s chief operating officer, Mark MacFarlane, commented on the well: “This is the first ever well in the deep-water section of the under-explored Tumbes basin.
“We will now integrate the important well information with the seismic data that we are currently reprocessing and update our prospect inventory for blocks Z-38 and Z-64.
“Tullow is building an extensive exploration position in Peru and, while this result is not what we had hoped for, we remain positive about Peru’s wider offshore exploration potential.”