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By Karolin Schaps
LONDON, Jan 15 (Reuters) - Africa-focused oil and gasexplorer Tullow Oil has written off $2.3 billion inrelation to exploration work and a number of its assets afterthe oil price rout.
Markets welcomed a cut to expenditure this year and detailsof hedged oil sales for 2015, with Tullow shares initiallytrading 3.3 percent higher before paring gains.
The London-listed company, under pressure to slash costsamid a collapse in oil prices, cut its losses on explorationwork in French Guyana, Mauritania and Norway, and trimmed groupinvestments for 2015 by around $200 million to $1.9 billion.
"We are resetting the business for a low oil priceenvironment," Tullow Chief Executive Aidan Heavey told Reuters.
Oil companies across the globe have been hit by a 60 percentdrop in crude prices in seven months, putting them underpressure to find new areas of their businesses where costs canbe trimmed.
Oil major BP is expected to announce job cuts in itsNorth Sea operations on Thursday.
Tullow, which reports full-year 2014 results on Feb. 11,said it expected to make a gross profit of $0.6 billion in 2014,with revenue of $2.2 billion, slightly below analyst estimatescompiled by Reuters.
However, analysts welcomed the firm's cut in explorationcosts and the fact that 60 percent of its 2015 oil sales hadbeen pre-sold at a floor price of $86 per barrel. The companyalso has hedges in place for the following two years.
"We see the update slightly on the positive side. Theincrease of 2016 hedges and the further cut in explorationexpenditures are good defensive measures," said analysts OrielSecurities, who recommend buying the oil company's stock.
Tullow, Britain's fourth largest oil and gas firm and a FTSE100 company, is continuing to review how it can furtherreduce operational expenses, which will include a reduction ofits 2,000-strong headcount.
The oil company's key new production asset, its TEN oilfield in Ghana, is on track for a mid-2016 start-up. (Editing by Jason Neely and Keith Weir)
