Tullow hit as Liberia well disappoints

TULLOW Oil downgraded its production forecasts for 2011 and said a well off the coast of Liberia would not provide oil in commercial quantities, disappointing investors on two fronts.

Tullow, which has a reputation for opening up new oil basins, is yet to establish this frontier part of West Africa as a potential new producing territory after classifying the Montserrado well in Liberia as a sub-commercial discovery.

The firm also revised down its 2011 average production to 79-81,000 barrels of oil per day (bopd), after giving guidance in August that full-year output would average 82-84,000 bopd, citing mechanical issues with wells at the Jubilee field in Ghana.

“It is a premium priced stock and vulnerable to any disappointing well results,” Oriel Securities analysts said of Tullow’s scaling back of production estimates.

Royal Bank of Canada analyst Al Stanton said that disappointment with Montserrado was heightened by the fact that historically a successful well for Tullow has been followed by further successes.

Tullow, whose future production targets are underpinned by the giant Jubilee oil field off the coast of Ghana, said the ramp up to the 120,000 bopd plateau production level at Jubilee would be delayed from its previous end-of-year guidance.

“It’ll be sometime during 2012. It depends really upon working through these issues,” finance chief Ian Springett said when asked when plateau production would be achieved.

Tullow also said it was still waiting for a much-delayed deal in Uganda to complete after predicting in August that it would conclude in September. Tullow has also been waiting since 2010 to finalise a deal to bring in new partners -- French oil major Total and Chinese group CNOOC -- to start a $10bn (£6.2bn) oil development project around Lake Albert.