Tullow's group working-interest production for 2012 of 79,200 barrels of oil equivalent per day was a touch below the firm's previous guidance of between 80,000 and 84,000 boepd. This "minor hiccup", as described by analysts at Barclays Capital, was caused by underperformance from the UK's CMS area due to a safety incident.
Tullow Chief Executive Aidan Heavey commented in a company statement:
"Tullow accomplished much in 2012. We have had significant exploration success in establishing Kenya as a new hydrocarbon province and continued to add to and mature our exploration portfolio. Jubilee production issues were successfully and cost effectively resolved and gross production from the field is now around 110,000 bopd. Commercial reserves have also increased, benefitting from the submission of the TEN development plan in Ghana. We also significantly strengthened our balance sheet in 2012 by concluding the Uganda farm-down and by refinancing and extending the maturity of our $3.5bn reserves based lending facility."
Tullow's update was generally regarded as positive by oil sector analysts who follow the firm.
A research note from London-based investment bank FoxDavies commented: "Tullow's trading update this morning highlights the enviable position that the company has gotten itself in to… Firstly, there is its development portfolio, especially Jubilee, where volumes are now set to not only be sustainable (due to upgrades to the infrastructure), but grow from current levels to above 120,000 bopd (gross). Secondly, there is its appraisal portfolio, especially with regards to its East African portfolio, especially Uganda, where there is still a lot of potential, and Kenya, where discoveries have only recently been made. With over 40 wells anticipated for 2013, there will be plenty of opportunity for further growth"
However, Canaccord took a more cautious view. "We believe the guidance on test rates in Kenya could potentially disappoint," Canaccord's analysts commented in a research note.
Barclays said it was looking for momentum from well-test results for Pai Pai and Twiga South in Kenya, which are scheduled to be released in February. "With three rigs from January 2013 onshore Kenya, we also anticipate well results almost every month," added the bank.