Shares in Tullow Oil (TLW) shed as much as 8 per cent after the Africa-focused explorer posted wider than expected losses for 2015. Though revenues held up reasonably well given the pull-back in crude prices, a $749m exploration pre-tax write-off, together with a $406m impairment charge and an onerous service contract charge of $186m conspired to push operating losses to $1.09bn.
Given the oil price slump, such pain was probably inevitable. Looking ahead, Tullow has three key factors in its favour: aggressive hedging which guarantees $75-a-barrel oil for just under half of this year's expected production, a sharp cut in capital expenditure after the imminent completion of the TEN project, and some remarkably high-margin oil. Indeed, chief executive Aidan Heavey believes savings at the Jubilee and TEN fields in Ghana can bring costs down to below $10 a barrel there by 2017.