Oil and gas producer Tullow Oil has raised its full-year production guidance after its flagship West African oil fields produced more than expected, lifting its shares more than 5 percent.
The London-listed company, which last month agreed to pay $250 million to settle a tax dispute with the Ugandan government, now expects to produce between 72,000 and 78,000 barrels per day (bpd) this year, up from the previously expected 69,000-77,000 bpd.
“Our major oil-producing assets in West Africa have performed strongly and we have upgraded our 2015 full-year production forecast accordingly,” Tullow Chief Executive Aidan Heavey said in his company’s trading statement.
The upgrade, which boosted Tullow’s share price by up to 5.4 percent in early trading on Wednesday, relieves some of the pressure on a company hit hard by a sharp drop in oil prices and poor exploration results that led to its first pretax loss for 15 years in 2014.
By 0756 GMT the company’s shares were up 2 percent at 347 pence.
“Confirmation of steady progress on the TEN development in Ghana and in East Africa, combined with an improved 2015 production outlook, is the best investors could reasonably hope for,” Barclays analysts said.
Tullow said that its TEN oil project in Ghana was on track to deliver first production in mid-2016, an event analysts see as a turning point as years of high investments are expected to start paying off for the company.
Tullow’s first-half revenue came to $800 million, against $1.3 billion a year earlier, while gross profit was $300 million, down from $700 million at the mid-point of 2014.
The oil company also said that it made a $40 million write-off on its exploration assets in the first half of the year. Tullow announced in January that it had been forced to write off $2.3 billion in 2014 in relation to unsuccessful exploration work and a number of its assets after the oil price rout.
To shield itself from further unexpected oil price movements, Tullow has increased its forward oil sales. It has hedged 34,500 bpd of production in the second half of the year at an average price of $85.98 per barrel, it said.
Brent crude is currently trading at about $63 a barrel.