TULLOW Oil's share price slipped nearly 16 per cent yesterday after the firm sounded the alarm on oil prices, booking a $1.5bn (£1.15bn) writedown on its outlook after lowering its longterm oil price outlook.

The energy firm slashed its prediction for oil prices by $10 to $65 a barrel, with underwhelming well exploration and a reduction in Ghanian reserves also contributing to the writedown.

"Tullow expects to report pretax impairments and exploration writeoffs of circa $1.5bn ($1.3bn post-tax)," the company said.

"Write-offs include Jethro, Joe and Carapa well costs in Guyana as a result of drilling results and Kenya Block 12A, Mauritania C3, PEL37 Namibia and Jamaica licence costs due to the levels of planned future activity or licence exits."

In a bid to guard itself from oil price fluctuations Tullow Oil has hedged 45,000 barrels per day of its 2020 output with an average floor price of $57.28. For next year, it has hedged 22,000 barrels per day at $52.80 each.

It expects to generate cash flow of at least $150m from 75,000 barrels per day at $60.

Tullow is still searching for a new chief executive after its share price plunged 70 per cent in December following the resignation of Pat McDade on the back of the business' poor performance.

His resignation, alongside that of exploration director Angus McCoss, wiped £1.2bn off the exploration-focused firm's value.

(c) 2020 City A.M., source Newspaper