Amidst a series of challenges currently facing British firm Tullow, the oil company has been forced to write off $800 million of its exploration costs in Kenya and Uganda due to a lowered forecast for long-term crude oil prices.
In a trading update, Tullow said its exploration costs “written off are predominately driven by a write-down of the value of the Kenya and Uganda assets due to a reduction in the group’s long-term accounting oil price assumption from $75 per barrel to $65 per barrel.”
Since October 2018, crude oil prices have traded below $75 per barrel. Tullow, which has spent over $1 billion in exploration and oilfield development in Kenya alone, is taking the current prices of the commodity as the basis of its budgeting.
Generally, oil explorers recover their operational costs over the years once production and sale of the commodity start. In this case, lower oil prices indicate a slower-than-expected rate of recouping the investment.
Read more on: The EastAfrican
The post British oil major writes off $800 million investment in Kenya, Uganda appeared first on Ventures Africa.
from Ventures Africa https://ift.tt/35VANfZ
via IFTTT
