In a trading update, the FTSE 250-listed company also said that its free cash flow for the year is forecast at US$350mln. Full-year capex is anticipated at around US$540mln, while net debt is expected to be marked at US$2.8bn.
“In West Africa, our non-operated assets continue to perform well,” said Paul McDade, Tullow chief executive. “However, 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."
"Tullow expects to deliver robust free cash flow for the full year,” McDade added. “This has been supported by our continued disciplined capital investment and underlines our commitment to further reduce our debt and pay returns to shareholders.”
In terms of operational milestones, he said: “Since the group's last update, Tullow announced two oil discoveries in Guyana at Jethro and Joe, and 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."
“The first-ever cargo of East African oil from Mombasa in August was an important milestone for Project Oil Kenya and we continue to make good progress with FID targeted in the second half of 2020,” the Tullow boss added.
Tullow shares fell 44.9p or 21.8% to trade at 160.45p in Wednesday’s early deals.
Annus horribilis for Tullow
Nicholas Hyett, analyst at Hargreaves Lansdown, in a note, said: “problems in the massive West African fields has seen production slip up – and combined with lower oil prices that means free cash flow isn’t going to meet management’s expectations,”
“Given the group has recently started paying a dividend, but still has some work to do on debt reduction, that’s far from ideal.
“Throw in troubles closing a deal to reduce its stake in oil fields in Uganda, and 2019 is turning into a bit of an annus horribilis for Tullow shareholders.”