Tullow Oil to wrap up all UK gas operations in Q3

Exploration and production group Tullow Oil highlighted the "strong progress" seen so far this year at its West African operations and kept its full year production guidance unchanged.

Tullow left its full-year production forecast unchanged with working interest oil production expected to average between 82,000 and 90,000 barrels of oil per day and working interest gas production tapped to come in at around 3,500 to 4,500 boepd.

The FTSE 250 group said it had reduced its net debt to $3.4bn as of 31 March as free cash flow was generated from the West African fields, with current headroom and free cash of roughly $1bn.

UK gas production averaged 2,700 barrels of oil equivalent per day - a number which the London-based firm expects to drop to around 1,900 boepd as the final producing fields cease production in the third quarter of the year. Decommissioning activities in the North Sea were already underway with well plug and abandonment operations kicking off ahead of the announcement.

Production in the first quarter of the year from Tullow's West Africa non-operated portfolio was "strong" across the majority of its fields, averaging around 23,100 bopd net, as its Equatorial Guinea fields performed "particularly well" over the period following a change of operator.

Tullow's net production from the Jubilee field in Ghana increased to 32,200 bopd thanks to production-equivalent insurance payments as a result of the FPSO Kwame Nkrumah shutting down for 19 days during the quarter.

Elsewhere, drilling of the first new production well on the Ntomme field was underway, with contracting of a second rig currently under review, while progress towards a final investment decision at its Ugandan and Kenyan developments continued.

Chief executive Paul McDade said, "Tullow continues to make strong progress in 2018 and we continue to generate free cash flow from our high-return production assets in West Africa. The drilling programme is now underway at the TEN and Jubilee fields in Ghana and we remain on track to deliver on our existing production guidance."

"The progress we have made is due to the hard work and financial discipline of the team and the support of our shareholders, allowing us to focus on growing our business and delivering returns," he added.

As of 0830 BST, shares had lost 3.44% to 230.93p, though this may reflect crude oil prices dropping back overnight.