Tullow shares rose 1.5% to trade at 202.8p on Wednesday after the oil company upgraded its production guidance for 2017 thanks to what’s described as a “strong performance” at the TEN and Jubilee fields, offshore Ghana.
The oiler has lifted the bar to a rate of 85,000 to 89,000 barrels per day.
Capital spending in 2017 is seen to have reduced, with guidance lowered to US$300mln, which in turn sees the year’s free cash flow forecast at around US$400mln.
Tullow also noted that net debt had reduced to US$3.6bn by the end of October and its reserves based lending arrangements are due to complete before the end of this year.
Company at mercy of oil prices
Nicholas Hyett, Hargreaves equity analyst, said: “A rising oil price, rising production, lower capex and falling debt - after the pain of the oil price crash the numbers are finally starting to head in the right direction at Tullow.
“News that further drilling has been approved at the group’s two huge Ghanaian oil fields, TEN and Jubilee, is very welcome while East African exploration activity seems to be bearing fruit.”
Hyett added, however, that whilst debt remains high, the company remains “at the mercy” of oil prices.
“If the past two years have taught us anything it’s that future oil prices are slippery things to get a grip on,” he said.