Tullow lowers spending forecast

LONDON, April 28 (UPI) -- Africa-focused exploration company Tullow Oil said Thursday it lowered its 2016 spending plans while reporting lower output from a key project offshore Ghana.

"It has been a very busy start to the year for Tullow," CEO Aidan Heavy said in a statement.

In December, Tullow, which has headquarters in London, sent its full development plans to the Ghanaian government for the offshore Jubilee field. The field's operations were restricted last year by technical issues at a gas compression system and the company in early April said part of the so-called Kwame Nkrumah floating production storage and offloading facility positioned off the Ghanaian coast was damaged and no longer functioning as designed. Oil and natural production can still continue, but Tullow said it would have to revise its operational procedures.

The company was forecasting a 2016 average production rate at Jubilee at around 101,000 barrels of oil equivalent per day. It now estimates production will average around 80,300 bpd for the first quarter.

Production from its combined working interests in West Africa and Europe was "marginally" lower than expected in large part because of issues at the Jubilee field.

Tullow entered the year with an announcement to cut its spending plans from $1.7 billion to $1.1 billion in 2016 and was looking to scale back even further. In its latest update, it said it was reducing its capital spending forecast from $1.1 billion to $1 billion.

Nevertheless, the company said it had enough lending support to boast of the potential of its holdings.

"Successful banking outcomes demonstrate the continued support of the group's lending banks during this period of low oil prices and the high quality of Tullow's asset portfolio," it said.

Moody's in a March note on Tullow said the company may recover on the back of the planned mid-2016 start up of its Tweneboa Enyenra Ntomme, or TEN field, off the coast of Ghana. The company said the first batch of produced oil is expected this summer. At its peak, the TEN field should be able to produce up to 80,000 barrels of oil per day.