Tullow Drops as French Guiana Well Finds No Significant Oil
Tullow Oil Plc (TLW), the U.K. explorer that found French Guiana’s first crude, plunged to a 1 1/2-year low in London trading after a second well off the Latin American territory found no “significant” oil.
Tullow shares fell 8.4 percent to 982.5 pence, the lowest closing price since at least August 2011. The stock was the worst performer on the FTSE 350 Index (NMX) today.
The GM-ES-3 well targeting Priodontes, a prospect northwest of French Guiana’s Zaedyus find, hasn’t found “significant hydrocarbons,” Tullow said in a filing after partner Northern Petroleum Plc (NOP) released a statement. Failure of the geological formation to trap oil has had “no follow-on consequences for prospectivity elsewhere in the block,” Tullow said.
The results are a further setback for the London-based company in a week when it reported a delay at its Sabisa exploration well in Ethiopia. The shares fell 5.4 percent on April 15 and extended their decline by 1.6 percent yesterday.
“Following quickly on from inconclusive results from the Sabisa well in Ethiopia earlier in the week, the news on Priodontes will have reset expectations on exploration for 2013,” said Theepan Jothilingam, a London-based analyst at Nomura Holdings Inc. “These were both seen as trigger wells,” or those that would transform the company’s fortunes.
Royal Dutch Shell Plc (RDSA), which holds a 45 percent stake in the Guyane Maritime license where Priodontes is located, declined to comment today. Tullow has 27.5 percent of the license and Total SA (FP) 25 percent. Northpet Investments Ltd., a company jointly owned by Northern Petroleum and Wessex Exploration Plc (WSX), holds a 2.5 percent interest.
Tullow’s Zaedyus well found oil in September 2011. A second well at the site, Zaedyus-2, failed to find commercial quantities of crude. GM-ES-3 is the third well in the area.
Northern Petroleum slumped 18 percent in London today, while Wessex sank 45 percent.
The GM-ES-3 well, or Priodontes-1, will be drilled deeper to 6,483 meters (21,271 feet) to further examine the Atlantic geology, Tullow said.
That extension may delay future wells in the exploration program, according to London-based Northern Petroleum. The company and its partners found “oil staining” in the so-called Bradypus fan part of the well, indicating “broader active hydrocarbon systems and potential,” it said.
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