Tullow depreciates Guyana’s exploration assets by US$60M

…cites unsuccessful exploration results in Orinduik Block

Following “unsuccessful exploration results or assessments” namely at the Jethro Well, Joe Well and Carapa Well No 1, Tullow Guyana has written down its assets by US$60 million, meaning its assets in Guyana would have depreciated by that amount as a result of the less than desired exploration results.
The UK-based company at the release of its financial results and investor documents earlier this month made the announcement that it has had to write down some US$1.2 billion in assets across a number of countries including Jamaica, Namibia, Mauritania, Uganda, Kenya and Guyana.
The company, following the Guyana discoveries in the Orinduik Block Offshore Guyana, had lamented that a combination of high sulfur at the Jethro and Joe wells along with low volumes discovered at the Carapa site has made commercialisation unfeasible.
The company is not expected to pursue any drilling activities in Guyana for 2020.
The company had reported that it now intends to integrate the results of the three exploration wells drilled at adjacent licences into its Guyana and Suriname geological and geophysical models before deciding the future work programme.
Meanwhile, the company has also announced that it has also fully written off its oil exploration licence for the Walton-Morant Basin offshore Jamaica, on which it has taken a US$36 million hit.
The write-off relates to what the company indicated in its most recent earnings report was the relinquishment of the Walton-Morant licence due to “expiry or planned exit”, but Tullow has not explicitly said whether it plans to pull out of the oil exploration project.
The licence expires in July. Its write-down to nil formed part of a wider US$1.2 billion of asset write-downs as the British company scaled back on its global operations.
Tullow holds 80 per cent interest in the Walton-Morant exploration project, while its partner, United Oil and Gas Limited, holds 20 per cent. They are seeking a third equity partner to finance the drilling phase of the exploration, under what is referred to in industry terms as the ‘farming out’ of the project.
Tullow in recent months announced that it scaled back its exploration activities in various markets and appointed a new head of the division, Amalia Olivera-Riley, formerly of Repsol and ExxonMobil.
The oil company said its exploration portfolio was to be “balanced between proven basins, targeted frontier drilling and near-field opportunities”.
It comes amid US$1.8 billion of losses at Tullow last year, which exceeded revenue of US$1.7 billion.
Tullow concluded its business review in February, which included slashing its staff by up to 35 per cent. The company is still seeking to hire a new CEO.
At the release of its financial results and investor documents earlier this month, Tullow indicated that it was in a better position following its restructuring.
Nowhere on its slides for exploration did it highlight Jamaica, beyond stating that the Walton-Morant licence exploration period expires on July 31; but it did highlight other regional assets in Guyana, Suriname, Argentina and Peru for exploration.