Africa-focused oil producer Tullow Oil said yesterday that it would have to lower its production outlook due to a technical fault that has forced a longer-than-planned shut-down at its Jubilee oil field off Ghana. The shares rose, however, as crude oil prices advanced.
A damaged turret means a maintenance shutdown will take another two weeks and production flows will take even more time to ramp-up, Tullow said.
“Tullow’s production guidance will be re-issued once the new operating arrangements have stabilised,” it said.
Analysts at Stifel estimate the two-week production cut would reduce full-year output by around 1,000-1,500 barrels per day net to Tullow, meaning an impact of more than $10m (€8.77m) on operating cashflow.
Tullow said the issue would not have a material impact on its revenue nor on its Ten oilfields, due to start operating this summer.
The company said it was now using a 250,000-barrel shuttle tanker and a 1m-barrel storage tanker to assure safe production.
Shares in Tullow nonetheless erased an early decline, to rise over 1.5% in London, as the wider market for oil stocks rose.
Oil prices rose yesterday, lifted by hopes that a punishing global excess of crude oil could be nearing a tipping point and firm economic indicators from the US and Germany that cast a positive light on growth in fuel demand.
Declines in US shale oil output and optimism over a proposed freeze in oil production, to be discussed by producers at a meeting in Doha next week, in particular helped to boost prices.
Brent futures were $1.85 higher at $41.28 at one stage, and were on track for a weekly gain of more than 6.5%.