Bangladesh gas find good news for Tullow Oil

TULLOW OIL had good news for shareholders yesterday when it announced the discovery of gas at a well in Bangladesh.

The company found gas at Lalmai, which is one of three wells it had drilled in the south-east Asian country this year. The markets reacted favourably to the news and added almost 2% to Tullow’s share price.

Tullow chief executive Aidan Heavy said it was too early to determine the commercial value of the discovery, but that there was “considerable upside potential”. Mr Heavy said Tullow was now in a “very exciting” phase and would drill up to 12 more exploration wells before the end of the year.

Goodbody analyst Gerry Hennigan said the results would heighten investor interest in Tullow’s activities in Bangladesh. The company abandoned its Rasulpur well earlier this year after a disappointing drilling programme, but has plans to drill another well at Bangora, a site located 40 kilometres from the successful Lalmai well and in which it has a 30% stake. “A positive result from Bangora, results from which we expect during the current month, would significantly raise the commerciality of the Lalmai find, given the infrastructure in the area and local demand for gas,” said Mr Hennigan.

Davy analyst Job Langbroek said the gas find would help to improve investor sentiment towards Tullow after a number of its exploration projects had failed to impress over the last two years.

Tullow is currently engaged in over 90 projects and focuses on south-east Asia, western Africa and the North Sea. The company is active in 16 countries and recently completed the €480 million takeover of Energy Africa, which is based in South Africa. The takeover was the biggest in Tullow’s history and is expected to double the company’s annual turnover and boost its cashflows. Tullow’s oil producing capabilities were significantly enhanced by the acquisition. It now produces the equivalent of 50,000 barrels per day.

The company’s Asian interests extend beyond Bangladesh to include the neighbouring countries of India and Pakistan.

It first began exploration activities in Bangladesh in 1997.