Tullow Oil has indicated a positive outlook for 2005, but weaker-than-expected production in the second half of last year disappointed investors.

In a trading statement, issued ahead of its full-year results due in April, the group said production this year will be enhanced by further output in the UK from the Horne and Wren project, the Munro development and the Schooner and Ketch acquisition. Some temporary reductions are expected at the Espoir Field in Côte d'Ivoire.

Tullow said that the average daily production for 2004 was 40,600 barrels of oil equivalent, 62 per cent ahead of 2003 levels. In the second half of last year, however, production was 51,800 barrels of oil equivalent, below earlier guidance of up to 54,000.

Tullow Oil shares fell almost 3 per cent after the statement, closing at €2.42, down 7 cent.

Tullow Oil chief executive Mr Aidan Heavey said the company was entering 2005 as a more focused organisation with a balanced portfolio of production and exploration interest and solid cash flow.