Tullow Cuts Output Goal on Jubilee, Abandons Liberia Well
Tullow Oil Plc (TLW), the London-based explorer with the most licenses in Africa, cut its full-year output target because of a slower-than-expected production increase from the Jubilee field.
Production for 2011 will average 79,000 to 81,000 barrels of oil equivalent a day, the company said today in a statement. That’s down from the 82,000 to 84,000 barrels forecast in August. Tullow will abandon the Montserrado-1 well off the coast of Liberia after failing to make a commercial find.
Tullow fell as much as 6.3 percent in London trading and was at 1,364 pence as of 8:25 a.m. local time. Today’s drop pared their gain for the year to date to 7.5 percent.
The Jubilee field in Ghana, Tullow’s largest project, is pumping about 80,000 barrels of oil a day, with recent output rates below expectations due to mechanical issues related to well designs.
“While there are some temporary technical issues, in terms of production levels of 120,000 barrels a day and recoverable reserves there is no change,” Chief Financial Officer Ian Springett said in an interview, referring to the planned plateau rate for the first phase. He declined to give an estimate of costs to fix the problem, saying Tullow may need to drill more wells to recover reserves.
The work may cost about $500 million, said Phil Corbett, an analyst at Royal Bank of Scotland Group Plc, Tullow’s in-house broker.
Production Interest
Tullow’s production interest in the Jubilee Unit Area will fall to 35.48 percent from 36.45 percent in December. About $3.4 billion has been invested in the development of Jubilee field from Tullow as well as its partners that include Anadarko Petroleum Corp. (APC) and Kosmos Energy Ltd.
Tullow ended force majeure on deepwater exploration off Ivory Coast “following the resolution of the political situation,” it said today. Drilling in the CI-103 and CI-105 blocks will start in the first quarter of 2012.
Force majeure is a legal clause allowing companies to miss deliveries because of circumstances beyond their control.
The Montserrado-1 well, operated by Anadarko, is now being plugged and abandoned and the drillship moved to Sierra Leone, according to Tullow.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
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