Tullow Oil PLC on Wednesday lowered its production guidance as half-year profit more than halved due to a lower oil price and significantly higher costs.

The oil and gas producer said pretax profit in the first half of 2023 fell 61% to $217.2 million from $560.5 million a year prior. The company declared no dividend, unchanged from a year ago.

Revenue declined 9.5% to $776.9 million from $858.6 million. However, it hailed its Jubilee South East field in Ghana, which has a significantly higher average production rate than the company has in general.

Chief Executive Officer Rahul Dhir said: ‘We are at an important inflection point in the evolution of our business plan. For the last two and a half years we have relentlessly focused on capital discipline, operational performance and appropriate investment in our assets. This has resulted in a much-improved business, material debt reduction and most recently, the delivery of Jubilee South East which has substantially increased production’.

The Jubilee South East field in Ghana averaged 72,400 barrels of oil equivalent per day in the first half of 2023, up sharply annually from 28,200. Production in general at Tullow Oil rose by 6.4% to 56,900 barrels of oil equivalent per day from 53,500 a year prior, making Jubilee South East an important asset with its higher output.

‘Tullow and its partners aim to maintain the increased level of production at Jubilee through an ongoing infill drilling programme. The partnership has identified multiple future drilling locations and further opportunities to extend the plateau towards the end of the decade and realise the full potential of the significant Jubilee resource base,’ the company said.

The realised post-hedging oil price decreased 15% to $73.3 per barrel from $86.3 a year prior, Tullow said.

However, cost of sales ballooned by 89% to $425.6 million from $225.4 million.

Looking ahead, Tullow lowered the upper end of its production guidance range for 2023 to between 58,000 and 60,000 barrels of oil per day, down from a previous guidance of 58,000 to 64,000. For 2022, the company had reported a working interest output average of 61,100 barrels of oil equivalent.

Tullow Oil shares fell 11% to 33.52 pence each on Tuesday morning in London.

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