Tullow Oil Plc dropped the most in a month after an exploration well in Sierra Leone showed the reservoir may not be commercial.
Tullow, which holds a 20 percent interest in the Jupiter-1 well, dropped 3.6 percent to 1,543 pence in London trading, the biggest decline since Jan. 18. The shares pared losses after the company said it closed a $2.9 billion sale of assets in Uganda that had been delayed.
“It appears the well was a technical success, but there are questions about whether it’s commercially viable,” said Braden Purkis, an analyst at Canaccord Genuity Corp. in London. “That, combined with Tullow trading at 52-week highs as of yesterday, as led people to think the company has gotten ahead of itself.”
Tullow is trying to add reserves after unlocking new oil provinces in Uganda, Ghana and French Guiana, where it has found about 4 billion barrels since 2007. Shares reached a record 1,611 pence yesterday.
No potential reserves for the discovery were given by the well’s operator Anadarko Petroleum Corp. Spain’s Repsol SA is also a partner in Jupiter-1.
Investec Securities Ltd. analyst Stuart Joyner said that investors may want to “sell into strength” after the well results.