2nd UPDATE: Tullow Makes Exciting New Oil Find Offshore Ghana

26th Jul 2010 08:26

(Adds Tullow comment, share price move.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Tullow Oil PLC (TLW.LN) shares rose almost 6% Monday after it said it has found a major new field offshore Ghana, potentially adding a billion barrels of oil equivalent to the resource estimate for the area. Owo is the second major oil discovery Tullow has made offshore Ghana. The first, Jubilee, which will produce its first oil later this year, propelled Tullow into London's blue chip index. Owo could potentially be even more valuable to the company, analysts said. "This is a high value discovery," said Tullow's exploration director Angus McCoss. "Oil quality here and reservoir quality is similar to Jubilee. It has come in with very highly pressured reservoirs." The Owo-1 well, close to the existing Tweneboa oil and gas discovery, intersected a 53 meters of net light oil, indicating that it is a "world class" field, said NCB Stockbrokers analyst Peter Hutton. The field contains light oil, which considerably improves the economics, and, "gets Tweneboa/Owo over commerciality by some measure," he said. If Owo had not found oil, resources in the greater Tweneboa area would probably have been capped at 400 million barrels of oil equivalent, but the new find makes it more likely that the area contains around 1.4 billion barrels, said Panmure Gordon analyst Peter Hitchens. Owo is also potentially more valuable to Tullow than the estimated 1.5 billion barrels in its other major discovery offshore Ghana, Jubilee, because it has a larger stake in the field, he said. Tullow has a 49.95% interest in the block containing Owo and a stake of 22.896% in the block containing Jubilee. Tullow will provide an official resource estimate once results are in from an appraisal well on the field is complete. That well has already started drilling as a sidetrack from the initial discovery well, said McCoss. On completion of the appraisal well, Tullow's rig will move on to the Onyina-1 exploration well targeting another large geological system between the Owo and Tweneboa fields. "Onyina is looking good as well," following Owo's success, McCoss said. Following a two-year run of exploration success that saw its market capitalization almost triple, Tullow has stabilized and its shares are little changed over the last six months. This latest discovery may give fresh impetus to the company's shares, which at 0713 GMT were up 4.7%, or 55 pence, at 1,234 pence, outpacing London's oil and gas index. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires July 26, 2010 03:26 ET (07:26 GMT)