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Tullow Oil refocuses spending in weak climate

New strategy includes huge write-off related to lack of drilling success.

By Daniel J. Graeber

LONDON, Jan. 15 (UPI) -- Africa-focused Tullow Oil said Thursday it was refocusing its spending plans in a weak oil market by targeting assets in West Africa.

Chief Executive Aidan Heavey said his company was looking to position itself to take advantage of market conditions once they improve. Oil priced at about half of its June value has forced many major oil and gas companies to trim their capital spending plans for the year.

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Heavey said his company would streamline its spending plans in an effort to cope with the weakened climate.

"We have re-allocated our future capital to focus on delivering high-margin oil production in West Africa which will grow significantly to around 100,000 barrels of oil per day net to Tullow by the end of 2016 and will generate stable, long-term cash flows for the business," he said in a statement.

In Ghana, the company said it was discussing with the government development plans for the giant Jubilee field, which Tullow estimates could eventually produce more than 125,000 bpd.

The region's deepwater Tweneboa-Enyenra-Ntomme prospect should deliver its first oil by 2016. At its peak, it is expected to produce about 80,000 bpd.

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Tullow in November announced initial plans to cut back in response to low oil prices.

"While this is a challenging time for our sector, Tullow is fortunate to benefit from world-class, low-cost and high-margin assets, strong and growing cash flows and a broad, diversified funding position," Heavey said in his latest comments.

The company said it was posting more than $2 billion in write offs related to drilling and operations costs related to unsuccessful offshore operations in French Guiana, Mauritania and Norway.

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