Africa-focused Tullow Oil has reported an operating loss for the second consecutive year, as the sharp decline in oil prices cut revenue by 27%.
Tullow said it was prepared to all but cease making new investments if the low oil price persists.
The company said it could cut 2017 investments by another 72% to $300m if oil prices remain weak, just a fraction of the $2.2 billion it spent in 2014.
Tullow made a full-year operating loss of $1.09 billion in 2015, a smaller loss than the $2 billion seen the previous year and in line with analysts' expectations, but still reflecting one of the worst spells in the company's history.
"Our focus is on driving costs down and making as many dollars per barrel as possible," chief executive Aidan Heavey told Reuters.
Oil prices have fallen around 70% since a peak in the middle of 2014, one of the worst market downturns in the past decade for producers.
Tullow Oil is banking on extra income from its 80,000 barrels-a-day TEN oil fields development project offshore Ghana, which is situated some 20 kilometres to the west of its flagship Jubilee field and is expected to come on stream in July or August.
Tullow's production costs at TEN are $9-10 a barrel, compared with a current oil price of around $30 a barrel.
However, Tullow said there was a risk, if oil prices remained low, that it might become non-compliant with its financial covenants by the end of the year.
Tullow has also begun discussions with its banks about redetermining its lending terms next month, a standard procedure in the industry.
"We recognise that with oil prices being a bit lower the banks may change the price specs a little bit," the company's chief financial officer Ian Springett.
"Whilst we may lose a little bit of debt capacity, it's all within our plans and expectation," he added.
In its results statement, Tullow's CEO Aidan Heavey said that Tullow had "adjusted well" to low oil prices last year.
"We secured current and future cash flow through good operational delivery in West Africa, continued to build our resource base in East Africa, significantly cut costs across the group and benefitted from our strong hedging position," the CEO stated.
"Our challenge in 2016 is to be equally robust in responding to the uncertainties that remain in the sector, " he added.
