Tullow Oil trimmed its 2023 production forecast on Wednesday, hitting its shares, but the West Africa-focused company said it was poised to benefit from investment in the start-up of a new field.
The London-listed company reduced the upper end of its production guidance for this year to 58,000-60,000 barrels per day (bpd) from 58,000-64,000 bpd.
The reduction was because of lower than expected production from its Jubilee field in the first half of the year and the timing of the start-up of the Jubilee South East extension in the second half, the company said, adding that Jubilee currently produces more than 100,000 bpd.
Its shares were down by around 9% by 0805 GMT.
CEO Rahul Dhir said the company was at “an inflection point” following the start up of the Jubilee South East extension, which would help Tullow deliver $800 million in free cash flow between 2023 and 2025.
“We’ve shifted from an investment phase to a harvest phase,” Dhir told Reuters.
Reporting first-half results, Tullow said adjusted earnings before interest, tax, depreciation, amortisation and exploration expenses stood at $1.17 billion, down from $1.28 billion a year earlier.
ullow reiterated its guidance for full-year free cash flow of $100 million at an oil price of $80 a barrel , its net debt outlook of $1.7 billion by year-end and investment budget of $400 million.
Benchmark Brent crude was last trading at $92.54.
Tullow’s shares have lost as much as 29% in the past 12 months. Its market capitalisation stood at $671 million on Tuesday.
The company said it had a range of options “to address debt maturities and position the business for a successful refinancing”.
Tullow hedged about 34,500 bpd of its second half output between average prices of $56 and $75 a barrel and 22,700 bpd of its first-half 2024 output between $56 and $76 a barrel.