Tullow Oil plc (LON:TLW) shares backed off further on Wednesday after it downgraded its production outlook due to complications with the start-up of the TEN operation offshore Ghana.
It told investors that there have been problems managing pressure in the Enyenra (one of the three main fields in the development) has limited output from TEN and a border dispute means new drilling is not presently possible to remedy the issue.
The company told investors that its output in West Africa was in-line with recent guidance during 2016, averaging 65,500 bopd (with that figure including 4,600 bopd ‘production-equivalent’ payments from its insurance).
Guidance for 2017 sees Tullow’s West Africa operations yielding between 78,000 and 85,000 bopd, and the company’s European gas interests adding between 6,000 to 7,000 barrels oil equivalent per day (boepd).
Tullow’s production guidance reduces near-term cash generation and suggests risks still remain at TEN, Numis analyst Thomas Martin said in a note.
Martin notes that at 88,000 boepd guidance, the mid-point of Tullow’s 2017 range, it is about 7% below the broker’s own forecast.
In London, Tullow shares were down 9.4p, 2.94%, changing hands at 313.2p each.
Tullow pulled back on Tuesday as well with investors reacting to Monday’s news that the group had a stake in its Uganda field development in a deal worth US$900mln – the deal eases some capital pressure but limited some of the project’s upside.
