Tullow shares get 1.8pc boost as Kenya oil find of 'good quality'
Published 23/11/2013 | 01:00
Shares in Tullow Oil surged yesterday after the company said it had struck oil at a new well in Kenya.
It is the fifth oil strike in Kenya for the Irish-founded and Africa-focused oil exploration company.
Shares rose 3.21pc in early trading on the news – enough to boost the market value of the UK-based, London Stock Exchange and ISEQ-listed business by about €270m – but gave up much of that big gain later in the session, settling up 1.8pc at €10.75 a share in Dublin.
That rise bucks a trend that has seen Tullow shares fall 35pc since the start of the year – thanks to a run of poor explorations results.
Recently the Kenyan operations were hit by a dispute with members of the local Turkana people that came to a head in October.
Then Tullow Oil was forced to halt operations at two Kenyan sites, after demonstrations by activists pushing for more jobs associated with the wells to go to local people.
Operations at both wells resumed on November 8, and are now fully operational, Tullow said yesterday.
It said it had "discovered and sampled moveable oil" at the latest Agete-1 exploration well in Block 13T. It features an estimated "100 metres of net oil pay in good quality sandstone reservoirs" the company said in an investor update.
The latest find is in an area close to the Kenya-Uganda border, some distance away from previous finds in the country and in a district where oil has not previously been extracted.
As such it is understood to bode well for other to-date-unproved prospects in the same area. Tullow Oil owns a 50pc stake in the new well. Canada's Africa Oil owns the other half.
"A fifth consecutive oil discovery onshore northern Kenya highlights the emerging world-class exploration and production potential within our rift basin acreage.
"An intensive campaign for 2014 includes appraisal and exploration within this first basin and pioneering wells targeting the prospectivity throughout the entire chain of similar rift basins," according to Angus McCoss, exploration director at Tullow Oil.
The company said the plan was that operations at the new site would be suspended once further investigations had been completed. Equipment used at the site will then move to prospects elsewhere in Kenya.