Tullow Oil Plc’s new project off Ghana will produce its first oil early next month after more than three years of development, cementing the company’s footprint in the African country.
Production of oil at TEN — also known as the Tweneboa-Enyenra-Ntomme project — will start early August, the company said in a statement Wednesday. Output should gradually increase to 80,000 barrels a day by the end of this year, it said. The Africa-focused explorer reported a net income of $30 million in the first half from a net loss of $68 million a year earlier, while net debt rose almost a third to $4.72 billion.
“The start of production from the TEN field in early August will be transformational for the group,” Tullow Chief Executive Officer Aidan Heavey said in the statement. The new project will allow the company “to significantly increase our net production and begin the process of deleveraging our balance sheet.”
The TEN project adds to Tullow’s flagship Jubilee field, also located off Ghana. Production there dipped to 62,900 barrels a day in the first half following a technical issue on its floating production, storage and offloading vessel, or FPSO. Output from Jubilee averaged 102,600 barrels a day last year, before the issue appeared.
The start of TEN comes after oil prices fell by more than half in the past two years amid an oversupply. Brent, the global benchmark, is trading at $44.77 a barrel, compared with more than $115 in June 2014. TEN is the biggest project to start up in Africa so far this year and one of the largest new developments in the world, Martin Kelly, senior analyst for Sub-Saharan Africa for Wood Mackenzie, said by e-mail Monday.
Also working on the TEN project with Tullow are Kosmos Energy Ltd. and Anadarko Petroleum Corp., each with a 17 percent interest. Ghana National Petroleum Corp. has a 15 percent stake and South Africa’s PetroSA holds 3.8 percent, according to Tullow’s website. Tullow and its partners have spent about $4.9 billion on the development of TEN.
Last month, Tullow cut its West African production guidance for 2016 to 62,000 to 68,000 barrels a day from a previous forecast of 73,000 to 80,000. Output will be lower than expected because of the shut down to address a faulty turret on the Jubilee FPSO. The installation of a new mooring system to resolve the problem will also halt production in the first half of next year, the company said. The total for this year includes an average contribution of 11,000 barrels a day from TEN, the company said.
Shares of Tullow gained 20 percent so far this year, making it the third-best performer on the Stoxx Europe 600 Oil and Gas Index.