Tullow Oil will not reach its production target of 100,000 barrels per day in 2017 after it said it would have to shut down its Jubilee offshore field in Ghana for up to three months next year for repair work.
Technical problems at the huge field also led the oil and gas producer to cut its west Africa oil production guidance for 2016, as previously expected, by around 12,000 bpd to 62-68,000 bpd.
The breakdown of a piece of equipment on an offloading vessel brought production at Tullow's prized Jubilee field to a halt for two months earlier this year.
Additional repair work required in the first half of 2017 will prevent Tullow from hitting its target of 100,000 bpd next year, its chief executive Aidan Heavey told Reuters.
He said that installed capacity to reach that level would be in place, however.
In its trading update today, Tullow added that gross costs to turn the offloading vessel into a permanently spread moored facility would amount to as much as $265m this year and $80m in 2017. Tullow will pay a third of the costs.
Mr Heavey said analyst estimates for insurance payouts of around $500m for claims relating to the repair work and loss of production were accurate.
Tullow's next large project, the TEN fields also offshore Ghana, is expected to come on stream in the next three to six weeks and produce an average of 23,000 bpd gross this year, the company said.
The cluster of fields will generate some valuable cashflow for Tullow whose net debt has risen to $4.7 billion.
Heavey said Tullow will resume exploration work in Kenya in the fourth quarter, expanding its search in an area where it has made some successful finds.
Tullow said its resource estimate in the South Lokichar Basin could rise to 1 billion barrels.
"With everything stabilising in the industry, stabilising oil prices, it's back to business again," the company CEO said. Tullow expects 2016 oil prices to average $40 a barrel.
Mr Heavey added that the company was carrying out less hedging than three years ago as the forward oil price curve was difficult to predict.
Tullow will continue its hedging strategy of forward selling 60% of the current year's production, 40% of the following and 20% beyond, he said.