Tullow to cut jobs… as crude oil prices decline

tullow 15OIL producer Tullow is bracing to cut jobs by the end of the first quarter in an effort to cut costs, following the dramatic fall in the price of crude oil.

UK media, quoting a source familiar with the company, reported yesterday that the Africa-focused oil producer has launched a review of staffing levels.

Details of cuts could be presented to the market as early as its next earnings statement due next month, according to the source.

Tullow, an Irish-based exploration company, employs more than 2,000 people across 22 countries including Ghana, with its African operations accounting for half the total workforce.

Oil companies across the globe are grappling with a drastic drop in oil prices that has hit earnings, putting firms under pressure to cut costs elsewhere.

Insiders, according to the reports, said that there will “unquestionably” be a smaller Tullow at the end of the streamlining process.

Tullow Oil is due to issue a trading statement and operational update today, and the market is expecting a steer on its capital spending review, as well as possible write-downs for the year.

Shares in the company have fallen by more than 50 per cent over the last year on both the London and Irish markets, and the stock closed at €5 in Dublin on Monday.

Oil prices have plummeted by 50 per cent since July to below $48 per barrel.

Goldman Sachs, global investment banking, securities and investment management firm, has asserted that oil will need to fall to below $40 for six months to slow US producers.

Already, Tullow has cut its capital expenditure plans for this year to $300 million, down from $1billion invested in the first half of 2014 alone.

It has already placed some of its smaller African offshore drilling projects under review in an attempt to rein in exploration costs.

Tullow Oil plc, through its subsidiary, Tullow Ghana Limited, has interests in two exploration blocks in Ghana — Deepwater Tano and West Cape Three Points. It is the operator of the Jubilee field, which straddles both blocks, and lies approximately 60 kilometres off the coast of Ghana.

The Jubilee field was discovered in 2007 and the first oil was celebrated on December 15, 2010, following the first initial production in November.

In addition to Jubilee, the Tweneboa-Enyenra-Ntomme fields have been discovered in the Deepwater Tano licence and in May 2013 the Plan of Development for the fields was approved by the government of Ghana.

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