Tullow Oil Plc (TLW), the London-based explorer with the most licenses 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 Jubilee oil field off Ghana will reach its output plateau by the end of the year, about four months later than the original target, Kosmos Energy Ltd., its partner in the venture, 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 5, Dragan Trajkov, an oil and gas analyst at Renaissance Capital Ltd. in London, said by phone. 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.
George Cazenove, a London-based spokesman at Tullow, declined to comment, saying the company will provide an update with its first-half results on Aug. 24.
Royal Bank of Scotland Group Plc 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, Phil Corbett, an analyst at RBS, which is Tullow’s in-house broker, said today.
Tullow fell 3.1 percent to 1,037 pence in London trading by 10:13 a.m. The shares have fallen about 17 percent 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, Gerry Hennigan, an analyst with Goodbody Stockbrokers in Dublin, said yesterday by phone. 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 July 5. The company in July raised its full-year output target.
The same month, Dallas-based Kosmos said it may delay drilling of its Cedrela-1 exploration well off Ghana to the fourth quarter after Transocean Ltd. (RIG)’s Marianas rig was damaged while working for Eni SpA. (ENI) Tullow is a partner in the project.
In May, Tullow and partners including Royal Dutch Shell Plc (RDSA) and Total SA (FP) delayed the completion of their Zaedyus exploration well off French Guiana until August because of drilling disruptions.
Tullow and Anadarko Petroleum Corp. (APC) suspended exploration off Ivory Coast in February because of political unrest in the country. At the same time, Tullow is proceeding with drilling of exploration wells in some West African nations and beyond.
“Second half of 2011 sees Tullow drilling some material exploration wells in Liberia, Sierra Leone, Guyana and starting with the Zaedyus result in French Guiana this month,” Richard Griffith, a London-based analyst at Evolution Securities Ltd., wrote in a Aug. 12 note. “If the markets don’t recognize this potential, industry may do instead.”