Tullow Oil PLC posted a combined loss of $114m (Shs377b), according to details contained in company’s half year financial report.
Out of the $114m loss, Tullow Oil Uganda, a subsidiary of Tullow PLC, accounted for of $77.8m (about Shs203b).
However, in an interview on Wednesday, Tullow media relations chief, George Cazenove, said the losses had been before tax, adding the business was growing in the right direction.
“The business is still growing in terms of scale, opportunities, etc. Most analysts would look at revenue and cash flow to decide on the health of a company and we are doing very well here because our West African production has performed very well,” he said adding that the company’s financial results are in line with market expectations.
The loss relates to the farm-down the company made when it was shedding off part of its stake to France’s Total and China’s Cnooc.
When Tullow farmed-down to the two companies, they withheld some funds which could only be released if the project achieved a certain level of success within a certain period.
Given the delays associated with the project, the two have exercised their legal rights to permanently withhold the money.
Tullow had registered the funds as an income but now they have to bring it out as a minus (loss).
The loss occurred when receipt of contingent consideration due from Cnooc and Total was reassessed and resulted in a reduction of the amount meant to be receivable by Tullow, from the two companies.
This triggered an income statement charge of $77.8m (Shs203b), classified as a loss on disposal.
Further still, during 2014, according to the report, Tullow made another payment of $36.6m (about Shs95b) “in respect of certain insurances granted on farm-down of Tullow’s interest in Uganda.”