Tullow Oil share price slides as it confirms damage to Ghana field

Jessica Morris
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Ghanaian President John Atta Mills (2nd
Source: Getty

Tullow Oil will suffer reduced oil output due to a damaged ship at its Jubilee field in Ghana, however the company assured it won't have a "material impact" on revenue.

The FTSE 250-listed oil explorer expects production to restart in two weeks, but under revised conditions. And it'll still take time to ramp up, Tullow added.

The company will re-issue production guidance for the year once the new arrangements have stabilised. It'd previously pencilled in output of 78,000 to 87,0000 barrels of oil per day for 2016.

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Shares in the company fell as low as 185.3p this morning, before shaking off losses to close up 1.7 per cent to 196.6p.

Tullow shares tumbled 11 per cent when it first announced there was a problem at the Jubilee field in February.

Paul McDade, Tullow's chief operating Officer, assured that the longer than expected stoppage wouldn't hit the company's revenue.

"We have appointed a highly experienced project team to work on a permanent solution while our operations team continues to ensure we have in place safe and sustainable arrangements for production from the field," McDade said.

Read more: Tullow Oil's losses narrow in the midst of falling oil prices

"Given the ability to continue production and because we have the appropriate insurance policies in place, we do not expect that this issue will have a material impact on our revenue."

But analysts at Barclays said today's update could fuel concerns about the stoppages near-term impact on production and cash flow.

"We estimate the longer-than-planned maintenance shut-down equates to about a fve per cent cut in 2016 production from the field," they wrote in a note.