TULLOW OIL, the London-listed explorer with the most licences in Africa, may cut production guidance for this year after delays at projects including Jubilee, its largest field, analysts said.
The Tullow-led $3.4 billion (€2.37 billion) Jubilee oil field off Ghana will reach its output plateau by the end of the year, about four months later than the original target, its partner in the venture Kosmos Energy said last week. Tullow has also faced drilling delays in Kenya, Ghana and French Guiana.
Tullow is likely to reduce full-year extraction guidance to below 90,000 barrels a day, the low end of a range announced on July 5th, said Dragan Trajkov, an oil and gas analyst at Renaissance Capital.
While the delay at Jubilee is unexpected, more serious to Tullow would be any impact on the field’s estimated resources arising from the later target, he said. A Tullow spokesman declined to comment, saying the company will provide an update with its first-half results on August 24th.
Royal Bank of Scotland has already lowered its forecast for Tullow’s production to 88,000 barrels of oil equivalent a day from an earlier estimate of 94,000 barrels, said Phil Corbett, an analyst at RBS, Tullow’s in-house broker.
Tullow fell 7.1 per cent to 994 pence in London, the most since December 2008. The shares have fallen about 21 per cent this year.
The Jubilee delay “is a concern because as you move forward, a higher proportion of Tullow’s production base is due to arrive” from it, said Gerry Hennigan, an analyst with Goodbody Stockbrokers. Some exploration issues are beyond Tullow’s control, he said.
Jubilee, Ghana’s largest oil field, was due to reach a plateau rate of 120,000 barrels a day in late August, Paul McDade, Tullow’s chief operating officer, said on July 5th. The company in July raised its full-year output target.
Dallas-based Kosmos said in July it may delay drilling of its Cedrela-1 exploration well off Ghana to the fourth quarter after Transocean’s Marianas rig was damaged. Tullow is a partner in this project. – (Bloomberg)
