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(Alliance News) - Tullow Oil PLC once again on Wednesday warned production will miss targets following continued operational problems in Ghana.
The firm also, alongside partner Eco Atlantic Oil & Gas PLC, has reported the presence of heavy crude oil in wells in Guyana, containing high levels of sulphur.
For 2019, Chiswick, London-based oil producer Tullow sees production averaging 87,000 barrels of oil per day.
In July, Tullow had warned production was likely to be between 89,000 barrels and 93,000 barrels, lower than the 90,000 barrels to 98,000 barrels initially guided.
The company said the lower than forecast production is mainly due to topside issues at the Jubilee field, which has constrained water injection and gas handling, as well as the suspension of a well at the TEN field. Both fields are off-shore Ghana, West Africa.
"Ghana production has not met our expectations this year, and we are working closely with our Joint Venture Partners to ensure that both fields perform to their potential," said Chief Executive Paul McDade.
Looking to other 2019 guidance, Tullow sees capital expenditure at USD540 million, free cash flow at USD350 million, and year-end net debt at USD2.8 billion. Capex in 2018 was USD423.2 million, free cash flow was USD411 million, and June-end net debt was USD2.9 billion.
"Tullow expects to deliver robust free cash flow for the full year. This has been supported by our continued disciplined capital investment and underlines our commitment to further reduce our debt and pay returns to shareholders," said McDade.
Elsewhere, Tullow said operations in Kenya are making good progress, with a final investment decision to be made in the second half of 2020. Tullow remains committed to Uganda's Lake Albert project, it said, despite the collapse of a farm-down in August with France's Total SA and China National Offshore Oil Corp.
In Guyana, in the north east of South America, Tullow is working, alongside Total and London-listed Eco Atlantic, to develop the Orinduik block. Two oil discoveries were made earlier in 2019 at the Jethro-1 and Joe-1 wells. Tullow also owns the Kanuku block in Guyana.
Eco Atlantic and Tullow on Wednesday said initial analysis of samples suggest the two wells contain heavy crude oil with a high sulphur content.
This, the two said, is not dissimilar to commercial heavy crude regions in the North Sea, the Gulf of Mexico, Brazil's Campos basin, and in Venezuela and Angola.
"Recent analysis has shown that at these locations we have encountered heavy oil. We remain confident in the broader light oil potential of the Orinduik and Kanuku blocks located in this prolific oil basin," said Tullow.
Eco Atlantic Chief Operating Officer Colin Kinley added: "Having spent three decades working within the heavy oil industry, we are very encouraged by the initial analysis of these wells and good parameters that define potential pathways to recovery.
"The fact the oil is already hot in the reservoir, and mobile, and has high quality porous sand to travel through, helps to eliminate a great part of the conventional heavy oil challenge."
Tullow was 20% lower in early trade in London at 164.55p, while Eco was 43% lower at 71.72p. Eco shares had hit 177p in September after reporting the two discoveries.
By George Collard; georgecollard@alliancenews.com
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