Sunday 20 October 2019

Tullow lowers output guide following 'technical issue'

Dividends: Tullow Oil CEO Paul McDade
Dividends: Tullow Oil CEO Paul McDade
Ellie Donnelly

Ellie Donnelly

IRISH explorer Tullow Oil has lowered its 2019 oil production guidance to 90,000-98,000 barrels per day, following technical issues in Ghana.

Tullow said the problems at the Jubilee and TEN projects in West Africa have now been resolved.

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The Dublin-listed company had previously forecast oil production of 93,000-101,000 barrels of oil per day for the year.

Shares in the group were down 1.5pc in afternoon trading yesterday, having earlier fallen by over 5pc.

The stock has climbed by a third this year, following bullish 2018 results, however it is still 80pc below the highs it reached in 2012.

In the first three months of this year Tullow produced an average output of 84,600 barrels of oil per day, according to a trading update.

Production is back up to around 95,000 barrels a day.

Job Langbroek, analyst at Davy Stockbrokers, said that while the focus will be on the dip in production, "this should not distract from a strong production profile over the full year and the potential for free cash generation and subsequent debt reduction".

At March 31, 2019, net debt at the company was $3bn (€2.7bn), with $1bn (€89m) of liquidity headroom and no near-term debt maturities.

In the past three months the group has won three new licences in the Malvinas West Basin, with work due to begin at the sites in 2020.

However, Tullow said that a final investment decision in respect of Kenya by the end of the year remained "an ambitious target".

Yesterday shareholders approved the group's first dividend payment since 2014. CEO Paul McDade said that reflected "the financial and operational progress that Tullow has made over the past few years".

"Oil production from our West African portfolio is currently running at 95,000 bopd [barrels of oil per day] after a short-term production issue in the first quarter and is due to grow in the second half of the year and beyond," Mr McDade said.

The company's "big focus" is now Guyana, added the CEO, who took over from Aidan Heavey two years ago.

Since being appointed at Tullow, Mr McDade has introduced tighter capital discipline and exploration in new areas.

Additional reporting Bloomberg

Irish Independent

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