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Tullow Oil slightly raises production guidance

By Daniel J. Graeber
Tullow Oil raises production guidance slightly for the year, but was dealt a blow in a ruling over a rig contract cancelled in response to West African maritime border disputes. Photo courtesy of Tullow Oil
Tullow Oil raises production guidance slightly for the year, but was dealt a blow in a ruling over a rig contract cancelled in response to West African maritime border disputes. Photo courtesy of Tullow Oil

July 25 (UPI) -- After a stumble on a rig contract in West Africa, production from regional assets should be a bit higher than initial forecasts, Tullow Oil said Wednesday.

The West Africa-focused company said it revised its full-year oil production guidance from between 90,000 barrels of oil per day at the high end to 92,000 bpd. Production during the first half of the year averaged 88,200 bpd, in line with expectations.

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Most of the company's assets performed better than expected, though output from its flagship Jubilee field off the coast of Ghana continued to face headwinds because of problems with floating production infrastructure.

Operations offshore Ghana were closed for weeks at a stretch in the first quarter in order to carry out the first stages of repairs to parts of the floating infrastructure, which has been a chronic challenge for the company's work at Jubilee.

Jubilee production averaged 35,300 bpd net to Tullow in the first half of the year. Remediation of floating infrastructure is in its final phase and the company said it expected output to increase to around 36,400 bpd for a net full-year average.

"This has been a period of strong delivery in West Africa which continues to be Tullow's engine for growth," Gary Thompson, the company's executive vice president for West Africa, said in a statement.

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An English court in early July ruled against Tullow in a dispute over a rig contract with Seadrill that was cancelled in 2016. The court ruled Tullow erred in cancelling the contract in response to a decision from the government in Ghana to halt drilling at a field then claimed by the Ghanaian and Ivorian governments.

After the International Chamber of Commerce backed the ruling, Tullow was ordered to reimburse a client for about $14 million plus interest over the dispute.

Tullow reported gross profit of $521 million, in line with expectations. Analysis emailed from RBC Capital Markets found the contract dispute "was an unwelcome hiccup" for the company.

After production at the at some regional assets started in 2016, Tullow cautioned that drilling may stand still because of border disputes between the governments of Ghana and Ivory Coast.

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