Anadarko Finds Oil in Sierra Leone Exploration Well

Anadarko Petroleum Corp., the U.S.- based partner in BP Plc’s damaged Gulf of Mexico well, said it discovered oil at its Mercury-1 exploration well off the coast of Sierra Leone.

Drilling encountered 135 net feet of oil pay in two Cretaceous-age targets, the Woodlands, Texas-based company said in a statement today. The well, drilled at a depth of about 15,950 feet (4,860 meters) in about 5,250 feet of water, found light sweet crude in addition to the lower-grade oil in a shallow secondary reservoir.

“Choosing the next well location will be very important -- we’ll know whether we’ve got something that really looks like Ghana,” David Bamford, a non-executive director at Tullow Oil Plc, Anadarko’s partner, said in an interview in London today. “It’s very encouraging.”

Anadarko and London-based Tullow are developing the Jubilee field off Ghana, which will start production next month. The field discovered in 2007 holds about 1 billion barrels of oil resources. The companies drilled the Venus B-1 exploration well that made the discovery last year off Sierra Leone. Spain’s Repsol YPF SA is the third partner in the Mercury-1 well.

Oil companies, such as Total SA, BP, Exxon Mobil Corp. and some smaller explorers are drilling wells in search of oil and gas along the western coast of Africa. The geology that stretches from Mauritania to northern Namibia may hold 71.7 billion barrels of undiscovered oil, according to U.S. Geological Survey estimates.

Resource Estimate

Anadarko shares climbed 62 cents, or 1 percent, to $64.60 at 4:01 p.m. in New York Stock Exchange composite trading. Tullow rose 17 pence, or 1.4 percent, to 1,253 pence at 4:35 p.m. in London and Repsol advanced 35 cents, or 1.8 percent, to 19.95 euros in Madrid.

“In the primary objective, the Mercury well encountered approximately 114 net feet of light sweet crude oil with a gravity of between 34 and 42 degrees API (the American Petroleum Institute scale), with no water contact,” Anadarko Exploration Vice President Bob Daniels said in the statement. “An additional 21 net feet of 24-degree gravity crude was encountered in a shallower secondary objective.”

The partners will need another couple of wells to further explore the discovery, Bamford said.

“Going into the well Tullow indicated the consortium were targeting 450 million barrels of oil equivalent at Mercury,” Oswald Clint, a London-based analyst at Sanford C. Bernstein & Co., said in a report. “While some of the net pay today is made up of thin sands, the increased net pay from 45 feet in Venus to 135 feet in Mercury is a clear positive, especially with the clear presence of light crude.”

The Mercury well is located in the SL-07B-10 block about 40 miles (65 kilometers) south of the Venus discovery. The block is operated and 65 percent owned by Anadarko, a 25 percent stake is held by Repsol and the remaining 10 percent is owned by Tullow. Anadarko controls 4.6 million acres on five deepwater blocks off the coast of Sierra Leone and Liberia.