Tullow shares surge 5pc after Kenya discovery
SHARES in Tullow Oil surged yesterday on the first day of trading in the company after it increased its estimated reserves at a discovery in Kenya.
The company's stock rose as much as 5pc in London before ending the day up 3.5pc at £15.17.
The move came after the company said there was more oil than previously expected at its Ngamia-1 well in Kenya.
The well is the first ever oil find in Kenya.
According to Tullow the well, of which it owns half, now had net oil pay of over 100 metres -- a good bit up on previous estimates.
The improved estimates were enough for Goodbody Stockbrokers' Gerry Hennigan, who upgraded Tullow to "buy" from "reduce".
"Ngamia represents the first well in a potentially lengthy campaign to be carried out in a remote region.
"Attributing similar potential to the onshore Kenyan campaign to that uncovered to date onshore Uganda (where Tullow has found an estimated 1.5 billion barrels) results in a 6pc increase in our total net asset value for the company and raises our price target from 1,455p to 1,680p," he said.
Davy Stockbrokers Job Langbroek said the success at Ngamai reinforced Tullow's operations in the region.
"(The find) underpins Tullow's African strategy and points to its understanding of onshore 'tertiary' plays in Africa."
Davy now has a group valuation on Tullow of 1,536p per share and with an "outperform" recommendation.