Tullow Oil yesterday reported a 13 per cent increase in production last year to 73,000 barrels of oil equivalent per day (boepd), as analysts scaled back full-year earnings forecasts by as much as 10 per cent.

In a trading update prior to the release of its full-year results in March, the company downgraded its 2008 production outlook to 70,000-74,000 boepd. Blame was laid at the foot of continued delays in its UK drilling programme in the North Sea.

Tullow last November downgraded 2007 production targets from 80,000 boepd to 72,000- 75,000 boepd, which it attributed to delayed completion of wells within its Ketch field, conservative production management in response to weaker gas prices, and planned maintenance shutdowns.

Yesterday's 2008 production forecast by the company compared with analysts' consensus of as much as 77,000 boepd this year. However, the company was more upbeat on the outlook for one of its African prospects. An undrilled region in the Butiaba area of Uganda - where the company plans to drill eight wells this year - was likely to have "more numerous prospects" than previously thought, the company said.

This was balanced by a £30 million writedown on Tullow's Chinguettie field in Mauritania after a reservoir performance review. The field's potential would be "significantly downgraded" at its full-year results announcement in March, the company said. Tullow, which had seen its share price almost double in the second half of last year before the recent market meltdown, said last year's result had been driven by "exceptional exploration success" and rising oil and gas prices.

Citigroup analyst Mark Bloomfield said the update would serve to improve sentiment in Tullow shares. He reaffirmed his "buy" recommendation for the company's stock with a share price target of £8 a share. Davy cut its 2007 earnings per share forecast on the news of the writedown to 11.6p from 12.4p despite a strong fourth quarter.

Shares in Tullow fell by eight pence to close at 539.5 pence in London last night.