Tullow shares rise after Kenya oil discovery

Tullow Oil, the Irish explorer with the most licenses in Africa, climbed the most in six weeks in London trading after raising its estimate of crude at Kenya’s first oil find.

Tullow rose 3.3% to 1,517 pence, the biggest one-day gain since Mar 26, after saying deeper drilling at the Ngamia-1 well revealed over 100m of oil.

That is five times more than earlier reported and more than double the amount at Tullow’s other East Africa exploration wells, it said.

The London-based firm, which has unlocked billions of barrels in so-called frontier regions from Uganda to French Guiana, is seeking to replicate those landmark finds drilling in East Africa.

With Canadian partner Africa Oil, Tullow is aiming for at least 300m barrels with its first two sites in an area stretching from Kenya to Ethiopia.

“This looks like a material discovery that could be worth 19p (24c) per share directly,” said Nick Copeman, an analyst at Oriel Securities in London.

The Ngamia-1 well has been drilled to 1,515m, Tullow said. It will drill to 2,700m at the site, part of a basin that is similar in size to Uganda’s Lake Albert Rift Basin.

While Tullow plans to start small-scale oil production this year in Uganda and Tanzania produces gas from two offshore fields, no commercial discoveries have been made yet in Kenya.

“We now look forward to the drilling and evaluation of the deeper potential of this well and the acceleration of our seismic and drilling campaigns in the region,” said Tullow exploration director Angus McCoss in a statement.

— Bloomberg