TULLOW OIL’S share price fell more than 4 per cent yesterday after the company confirmed technical problems had slowed production from one of its key fields late last year.
Tullow said it expects 2011 revenues to come in at a record $2.3 billion (€1.8 billion), more than twice the $1.1 billion it reported for 2010.
The Irish group is also set to join forces with oil and gas giant Shell to look at possible deep-water exploration opportunities in the Atlantic.
However, the company said production from the Jubilee Field in Ghana, one of its main oilproducing assets, slowed towards that of 2011 – to 70,000 barrels a day from 88,000 – because of technical problems at the business end of a number of wells. Work to solve the problem has started but production from the field, in which Tullow has a 35 per cent stake, will be limited to 90,000 barrels a day by the end of the year instead of 120,000. The remedial work is likely to cost $400 million. Tullow will initially be liable for 35 per cent of that figure, $140 million, but it is likely it could recover some of this cost. The company stressed the problem had not resulted in a loss of reserves.
The production glitches, along with the slow pace of government approval for the sale of a two-thirds interest in its Ugandan field to partners Total and CNOOC, prompted some investors to sell the stock.
Its price in London, where most of the group’s shares are traded, was down 4.2 per cent at £13.94 just ahead of the close of business yesterday.
Tullow will continue with the development and exploration work scheduled for this year. It plans to drill 40 exploration wells in 2012. It has also signed a memorandum of agreement with Shell over frontier exploration in the Atlantic. The pair will focus on areas whose geology indicates the presence of oil and gas.
