Tullow Oil share price: Extractor obliged to limit Ghanaian production

on Feb 18, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Tuesday, February 18: Africa-focused Tullow Oil Plc (LON:TLW) has been asked to cut crude output from the Jubilee field in Ghana or flare gas, Bloomberg has reported. The FTSE 100 oil and gas explorer is currently reinjecting gas at the field due to delays in the start-up of an onshore gas processing plant.

Tullow Oil’s share price has shed just under 0.2 percent so far today.
**Tullow asked to cut production from Jubilee**
Bloomberg yesterday reported that Ghana was in discussions with operators of the offshore Jubilee field to cut crude output by about 10 percent or to flare gas to reduce the quantities reinjected into the deposit.
Tullow Oil, operator of Jubilee, is reinjecting gas at the field to limit production to about 100,000 barrels of oil a day. The start of gas shipments from Jubilee has been delayed by at least a year while a processing plant remains unfinished, forcing the company to inject the fuel back into the reservoir.

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Tullow expects the gas plant to be operational in the second half of the year.
Ghana’s Deputy Petroleum Minister, Benjamin Dagadu, told Bloomberg that the government was also considering shipping the gas directly to thermal plants in Takoradi in Ghana’s western region, bypassing the gas plant.
“We are looking at the economics of either flaring gas or cutting production to save the reservoirs,” Dagadu said. “A decision will definitely be taken by end of the month.”

In reporting its full results last week, Tullow said that last year’s delays in Ghana National Gas Company’s onshore gas processing plant would this year require alternative gas disposal options to achieve an average gross production rate of around 100,000 bpd from Jubilee.
**Analysts on Tullow Oil**

Barclays last week reiterated its ‘overweight’ rating on Tullow Oil with a price target of 1,500p, while analysts at Deutsche Bank – which rates the FTSE 100 company as a ‘hold’ – lowered their price target from 980p to 950p. Both Beaufort Securities and Killik & Co reaffirmed Tullow Oil as a ‘buy’ without providing a price target. The Africa-focused explorer currently has an average ‘buy’ rating and a consensus price target of 1,173.63p.

Tullow Oil reported its full-year results last week, posting a drop in profit in line with guidance issued by the company in January. (Tullow Oil share price: Well opens ‘new oil play’ in Mauritania)
The company also provided a much-anticipated update on its drilling activities in Mauritania, saying that a wildcat well had opened ‘a new oil play’ in the West African country. The company noted that further assessment would be required before follow-up activity was embarked upon.
Killik described the drilling result as ‘disappointing’ while RBC Capital analyst Al Stanton thought that the “management’s commentary about it being a technical breakthrough rather than a commercial success” would weigh on sentiment.
**As of 10:14 UTC, buy Tullow Oil shares at 768.00p.**
**As of 10:14 UTC, sell Tullow Oil shares at 767.50p.**
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