Tullow falls after Ghana exploration well fails to find oil
Published 21/10/2010 | 12:09
Tullow Oil fell the most in six weeks in London after an exploration well in offshore Ghana failed to find oil.
The Onyina-1 well in the Campanian prospect, between the Tweneboa and Jubilee fields in the deepwater Tano license, encountered water-bearing reservoirs, the company said in a statement in London today.
The shares dropped 3.2pc to 1,213 pence, the biggest decline since September 3, at 9:22am.
“The lack of hydrocarbons at this location highlights the high risks of charging and trapping oil in this secondary play,” Angus McCross, exploration director at Tullow, said in the statement.
Tullow has fallen 7pc this year after Ghana blocked the sale of Kosmos Energy LLC’s stake in the Jubilee field to Exxon Mobil, and plans to start pumping from fields in Uganda were delayed by a tax dispute.
Jubilee was discovered in 2007 and has potential resources of 1.8 billion barrels, one of the biggest finds in Africa.
Today’s report “is disappointing but does not change our stance on the shares,” said Peter Hitchens, an analyst at Panmure Gordon & Co, in an emailed note to investors.
“The company is still in an active drilling program which can add significant shareholder value.”
Tullow, with partners Anadarko Petroleum, Kosmos and Ghana National Petroleum, is investing about $3.35bn to develop the Jubilee field.
The first phase is expected to start pumping 120,000 barrels of oil a day in the first half of next year.