Lead operator of Jubilee fields, Tullow will shut down Floating Storage and Offloading vessel (FPSO) Kwame Nkrumah for up to three months next year for repair work.
Consequently, Tullow Oil will not reach its production target of 100,000 barrels per day (bpd) in 2017.
Technical problems at the Jubilee 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 turret bearing on FPSO Kwame Nkrumah 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.
Tullow added that gross costs to turn the offloading vessel into a permanently spread moored facility would amount to as much as $265 million this year and $80 million in 2017.
Tullow will pay a third of the costs.
Analysts estimate for insurance payouts of around $500 million for claims relating to the repair work and loss of production.
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, Tullow said.
The cluster of fields will generate some valuable cash flow for Tullow, whose net debt has risen to $4.7 billion.
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.
Tullow will continue its hedging strategy of forward selling 60 per cent of the current year's production, 40 per cent of the following and 20 per cent beyond.
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