Tullow Oil Plc (TLW), the U.K. explorer that found billions of barrels from Uganda to French Guiana, said it made a second discovery in Kenya, raising prospects the country will become an oil producer.
Tullow found 30 meters (100 feet) of oil at its Twiga South-1 exploration well as well as a layer of so-called tight oil that’s 796 meters deep, it said in a statement in London. The find makes the company more confident that it will uncover oil and gas in neighboring areas of Kenya and Ethiopia.
The company made Kenya’s first oil discovery earlier this year at its Ngamia well in the north of the country. Tullow’s Chief Executive Officer Aidan Heavey said in May that Kenya, which has no history of oil production, may have more potential than neighboring Uganda, where the company and its partners have found about 2.5 billion barrels of resources.
“This immediate follow on discovery reaffirms the considerable prospectivity of the Lokichar Basin,” said Angus McCoss, exploration director at Tullow, in a statement. “Having significantly expanded our plans in Kenya and Ethiopia, there is much to look forward to as the exploration campaign and testing program move ahead.”
Tullow, along with its partner Africa Oil Corp. (AOI), will now conduct a series of flow tests at Twiga over the next four to eight weeks. It will then move the rig back to its first discovery in Kenya at the Ngamia-1 well, where it found more than 100 meters of oil.
“The well results to date reaffirm the basin’s multi- billion barrel size and supports our belief in the region’s transformational potential on Tullow,” said Jamie Maddock, an analyst at Morgan Stanley in London, in an e-mailed note. He rates the stock “overweight.”
Tullow expects a result from its Paipai-1 well in Kenya by the end of the year. The Sabisa-1 well in Ethiopia will start drilling next year, it said.
To contact the reporter on this story: Brian Swint in London at firstname.lastname@example.org