Tullow Oil disappoints with 2017 production guidance for TEN field

Following first oil from its TEN field offshore Ghana in August, Tullow Oil produced an average of 65,500 barrels of oil per day from West Africa and said in 2017 it expects to average between 78,000 and 85,000 bopd, though this was below some analysts' expectations.

Year-end net debt of $4.8bn was $0.1bn ahead of guidance, driven by stronger than forecast operating cashflow.

Due to issues managing pressure at TEN and because no new wells can be drilled until after the border dispute ruling later this year, production from TEN in 2017 will be managed at a lower level than expected, at an average only 23.6m barrels of oe/d net.

However, Tullow assured that reserves remain in line with prior expectations and wells had been tested to capacity of 80m barrels per day over a 24-hour period.

For 2017, its share from the Jubilee field is expected to average 36,300 bopd, with business interruption payments making up for an expected fall to 24,300 bopd from the 26,200 last year due to an expected 12 weeks of shutdown for remediation works.

Net production from the West Africa net non-operated portfolio is expected to fall around 22,000 bopd in 2017 from the 27,800 bopd in 2016.

Chief executive Aidan Heavey, who is moving to chairman with operations director Paul McDade taking his seat, hailed the company's delivery of TEN on time and on budget in the face of technical challenges and "another tough year for the oil & gas sector".

"Tullow is therefore now very well placed to take advantage of the opportunities that conditions in the sector offer. We took action early to deal with lower oil prices and we are now benefitting from the re-set and re-structured business that we created," he said.

He pointed to the $900m farm-down agreement in Uganda earlier this week as "clear evidence" of the commercial attractiveness of its East African portfolio.

Analysts at broker Numis said the production outlook for 2017 was below expectations due to underperformance from the TEN field and this reduces near-term cash generation "and suggests risks still remain at TEN".