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LONDON (Reuters) - Tullow Oil's (TLW.L) long-serving CEO and founder Aidan Heavey is to step down in April and retire within two years, the company said on Wednesday as it announced lower than expected production for this year due to teething issues at a new field.
The disappointing trading update sent the shares down around 3 percent in early dealings, erasing all the gains the stock had made earlier this week on the back of a $900 million deal to sell a stake in a Ugandan oil field to Total (TOTF.PA).
Heavey, who founded Tullow in 1985 and named it after the Irish town where it was set up, will be replaced as CEO by Chief Operating Officer Paul McDade after the company's annual general meeting on April 26 when Heavey will become chairman for a maximum of two years.
"When you're somebody who starts a business it is obviously hard to pull back from it but you know yourself when you reach a stage when it has to be done," Heavey told Reuters, adding he would have left sooner if the oil market had not taken a downturn.
Analysts largely welcomed McDade's appointment, saying it cleared up uncertainty about Heavey's future at the company.
"I'll bring a fresh approach to our strategy but you shouldn't expect the whole strategy to change," McDade told Reuters.
He will take over at a crucial time for Tullow, which brought its multi-billion dollar TEN oil fields in Ghana on stream just five months ago and now needs to turn costly investments into profits.
The oil producer, like its peers, was hit hard by a collapse in oil prices that was at its worst a year ago.
Tullow said on Wednesday 2016 full-year revenue is expected to have fallen 19 percent year-on-year to $1.3 billion, with net debt at $4.8 billion.
The company will publish full 2016 results on Feb. 8.
This year's West African production estimate has already been scaled down to 78,000-85,000 barrels per day (bpd), with the flagship TEN fields expected to contribute a lower-than-expected 50,000 bpd due to problems with managing pressure in one of the reservoirs.
Once at full capacity the fields will be able to produce 80,000 bpd.
Tullow is also battling production issues at its Jubilee oil field which will have to close for up to 12 weeks this year for modification work.
Tullow, fundamentally an exploration company, will bolster its exploration campaign again this year after the weak market forced the company to focus spending on more advanced projects.
This year, Tullow said it will drill in Kenya and underexplored Suriname.
"It's about us getting back to bold, exciting and big exploration," McDade said.
Editing by Susan Thomas and Elaine Hardcastle