Tullow Oil trims output forecasts Tullow Oil, the African-focused explorer, has undershot annual production guidance and also trimmed estimates for the coming year. Shares in the FTSE 100 company, whose main production asset is the Jubilee field off the coast of Ghana, slipped 3.2 per cent to £11.86 after it said exploration and development spending on new projects would rise to $2bn in the coming year. In a statement ahead of full-year results in February, Tullow blamed an enforced shutdown of production at one of its remaining UK assets in the North Sea for a "slight shortfall" in production that averaged 79,000 barrels of oil equivalent a day last year. The company had forecast a range of 80,000-84,000 boe/d. The company last month put its remaining UK and Dutch North Sea oil and gas interests, including the field that had been shutdown, up for sale as it announced a deal to buy Norwegian explorer Spring Energy for a minimum of $372m. However, Tullow said production at the Jubilee field in Ghana, of which it owns about a third, was running at 110,000 boe/d, close to capacity of 120,000 barrels. The company on Friday predicted its share of production across its asset base would be in the range of 86,000-92,000 boe/d this year. In its interim results, Tullow had guided towards daily output of 95,000 boe/d for 2013, climbing towards 200,000 - excluding the effect of any disposals - as its range of capital-intensive development projects centred on Africa come on stream over the remainder of the decade. In spite of the lowered short-term production forecasts, Aiden Heavey, Tullow's founder and chief executive, said the company had ended the year in good shape. Tullow's chief described the discovery of commercial quantities of oil in Kenya last year as "the clear highlight of 2012," adding that the company planned a further 11 exploration wells across Kenya and Ethiopia to add to the two wells already drilled. Company broker Barclays described the production update as a minor hiccup, arguing it expected at least one positive result among Tullow's "eight play-openers" for basins included in its drilling schedule this year. However Brian Gallagher, analyst at Investec, who downgraded the stock earlier this week, pointed to the possibility of more production disappointments. "While still a best-in-class explorer, as Tullow has grown it has become increasingly leveraged to the "P" [production] rather than the "E" [exploration] side of its portfolio," he said. Exploration write-offs climbed from $121m to $299m for the year, contributing to total write-offs of $670m. Brendan Warn, analyst at Jefferies, said: "To reverse the current negative market sentiment towards Tullow in the near to medium term, we need to see some successful exploration results from the current batch of wells and/or divestments." During the year, Tullow completed the sale of interests at fields in Uganda to Total of France and Cnooc of China for $2.9bn while it also extended a $3.5bn lending facility backed by its reserves. The company has emerged well financed to continue its aggressive exploration programme, said Mr Heavey.