Tullow Oil shares slump

Exploration group Tullow Oil has forcast full-year record revenues of $2.3 billion (€1.7billion), more than double the $1.1 billion recorded in 2010.

The group attributed the jump in revenues to increased production and higher commodity prices.

In an interim trading statement issued this morning the oil and gas explorer said capital expenditure for 2011 was $1.4 billion and this is expected to rise to $2 billion this year.

Net debt at the end of 2011 was approximately $2.8 billion, the group said.

Tullow had a 74 per cent exploration and appraisal success ratio in 2011. It plans to drill about 40 exploration and appraisal wells in 2012, it said.

The explorer said its production increased to 78,200 barrels of oil equivalent per day (boepd) in 2011. It forecast that production would be between 78,000 and 86,000 boepd this year.

Production from Tullow's Jubilee field, the group's largest project, is currently more than 70,000 boepd. However, the company said production had fallen from 88,000 boepd during the year,

Tullow's share price fell sharply in London after the company and its partners said it needed to invest about $400 million to fix mechanical issues related to well designs. Jubilee will reach plateau output of 120,000 barrels of oil a day in 2013, at least a year later than originally planned.

Shares in the company  declined by as much as 8.4 per cent, the steepest intraday decline since August 2010

"Record revenues and cash flows from increased production and strong commodity prices combined with industry-leading exploration success underpin another very good year for Tullow in 2011," said chief executive Aidan Heavey.

The company today announced a new frontier exploration partnership with Shell in the Atlantic basin. Tullow said the planned partnership would focus on making "transformational" discoveries in "underexplored frontier basins".

Tullow has interests in over 85 exploration and production licences across 23 countries in Africa, Europe, South America and south Asia.