London, UK | – Tullow Oil plc an independent oil & gas exploration and production group has placed some of its African offshore drilling projects under review as it plans to cut exploration costs to deal with the consequences of tumbling oil prices.
Tullow is reviewing operations in French Guiana and Mauritania and said it would cut exploration spending by $1.4 billion over the next two years.
It will refocus on existing assets and discoveries in Africa where it can produce oil more cheaply.
“We’re concentrating our fire-power on our major developments and producing assets,” the company’s chief executive Aidan Heavey.
Among these are Tullow’s Jubilee project in Ghana, where it expects to reach production of 120,000 barrels per day in the fourth quarter of 2015.
Tullow’s project review in French Guiana and Mauritania could result in a non-cash impairment charge of $850m, according to analysts.
The company is under pressure to restore its reputation after a string of disappointing exploration results this year.
The oil explorer has hedged 35,500 barrels per day of its output in 2014 at an average price of $87.18 a barrel, it said in its third-quarter results.
Brent crude prices have fallen 40% since early July and dropped close to a four-year low of $81 a barrel today, eating into oil producers’ margins.