Tullow Oil downgraded its 2019 output guidance to 90,000-98,000 barrels of oil per day (bbl/d) due to problems at its Ghana fields and sees final go-aheads for its Uganda in the second half while its Kenya project timeline was “ambitious.”
“[Ghana] performance was below expectations due to gas compression constraints on Jubilee during February and a delay in completing the Enyenra-10 production well at the TEN Field. Both issues have now been resolved,” Tullow said on April 25.
The company had previously expected to produce between 93,000 and 101,000 bbl/d.
“The ~3 percent reduction in 2019 net production guidance provides a headline, but should not concern investors in our view,” Barclays said in a note.
With much focus on Tullow’s three-well drilling program offshore Guyana, this year is also crunch time for Tullow’s East African projects.
Final investment decisions for its Ugandan project had been planned around mid-year and Kenya by the end of the year, which Tullow called “an ambitious target” on April 25.
The shipment of a first cargo of Kenyan oil to test the market, which was originally planned in the first half as well, is expected to sail in the third quarter, Tullow said.
In Uganda, a $208 million payment after selling a stake in its onshore fields to Total in a so-called farm-down deal was delayed last year because the country asked for more tax on the deal than expected.
“These discussions are expected to conclude shortly and will enable completion of the farm-down,” Tullow said.
The company has reduced its debt from $3.1 billion at the end of 2018 to $3 billion at the end of March. It has hedged 56,000 bbl/d this year at a floor price of $56.40 per barrel and 31,000 bbl/d at $58.68 per barrel for 2020.
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