Tullow Oil has seen revenues take a major hit following the collapse in oil prices over the last 12 months.
The Irish oil firm has become the latest company to revise its current operations after the price of oil dropped below $50 (£32) a barrel. Tullow stated that it will be writing off $2.2 billion with its exploration budget for 2016 cut by $200 million, a significant drop from the $1 billion in use at the beginning of 2014.
Oil prices have dropped dramatically in the past 12 months. Last week (January 13th), the price of Brent crude fell to a new six-year low when it hit $47.36 a barrel. It was similar story for US crude oil which has struggled to perform across the past year with its current price level well below the $50 mark at $45.90.
These falls have now begun to impact on the oil companies. While Tullow is set slash its revenue forecast other major organisations such as Shell and BP were also looking at cutbacks. BP confirmed on Thursday (January 15th) that it would be reducing its workforce by 200 jobs along with the loss of 100 contractors in its North Sea operations.
Shell has scrapped plans to build the world's largest petrochemical plants which it had developed with Qatar Petroleum in a project worth $6.5 billion. Premier Oil has also said it will be scaling back its spending plans with exploration expenditure reduced by 40 per cent for the coming year, writing off $300 million.
Speaking about Tullow's future plans, Aidan Heavey, Tullow Oil's chief executive, said: "We have reallocated our future capital to focus on delivering high-margin oil production in West Africa which will grow significantly to around 100,000 barrels a day… by the end of 2016 and will generate stable, long-term cash flows for the business.
"The reduced exploration programme will predominantly focus on a number of high-impact, low-cost exploration opportunities in East Africa."
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