Shares in Tullow Oil surged more than 7% in early trading on 13 January, even though the oil and gas explorer revealed it expects full year revenue and gross profits to be considerably lower than in the previous 12 months.
The FTSE 100 group expects revenue for the year to 31 December 2015 to be 27.6% lower year-on-year to $1.60bn (£1.11bn, €1.48bn), while gross profit is expected to drop 44.9% from the corresponding period in 2014 to $600m. Pre-tax operating cash flow before working capital is estimated to decline by a third to $1bn, the group added.
Tullow attributed the disappointing figures to the ongoing slump in oil prices, which has seen Brent crude and West Texas Intermediate trade to just more than $31 a barrel this week, and to a decline in production in Europe, which offset an increase in output in Africa.
Net production from the group's operation in West Africa in 2015 averaged 66,600 barrels of oil per day (bpd), a 4.76% increase year-on-year and in line with the guidance range of 63,000 to 68,000 bpd the London-listed group set at the end of 2014.
However, net production from Europe slumped 42.4% to 6,800 bpd in the 12 months to the end of December.
The group's realised post-hedge oil price in 2015 averaged $68 a barrel, sharply lower than the $97.5 per barrel it reported in 2014.
Moving forward, the group unveiled plans to reduce capital expenditure in 2016 to $1.10bn compared with the $1.70bn it spent in the past 12 months, adding approximately 90% of capital will be spent on development rather than exploration.
Tullow indicated it expects the cost of exploration write-offs and impairments to decline to $1.45bn in 2016.
"We continue to focus on driving down our costs and capital expenditure and, at the beginning of 2016, Tullow has a mark-to-market hedge value of more than $600m and financial headroom of $1.90bn," said group chief executive Aidan Heavey.
"Accordingly, we have a diversified balance sheet which supports our planned activities for the year ahead."
Meanwhile, Tullow added its Ghana-based TEN project is 80% complete and it expects it to be completed between July and August this year, as originally planned. Upon completion, the site will help the company boost its output to around 73,000 to 80,000 bpd.
The group, which aims to produce 100,000 bpd by 2017, said its European operations are expected to deliver between 5,000 to 7,000 bpd this year.