Broker snap: Credit Suisse lifts Tullow target after Kenyan discovery

26th Sep 2013 11:25

Credit Suisse has raised its target price for oil explorer Tullow following a successful discovery at the Ekales prospect in the South Lokichar Basin in Kenya.The group said results of drilling, wireline logs and samples of reservoir fluid indicate a potential net oil pay in the Auwerwer and Upper Lokone sandstone reservoirs of 60-100 metres in the Auwerwer and Upper Lokone sandstone reservoirs with a quality similar to that encountered at Ngamia and Twiga-S. Flow testing will be conducted to confirm productivity from the zones.Credit Suisse said that Tullow's pre-drill estimates ahead of testing estimate 53m barrels of oil equivalent (mmboe) gross for Ekales, though the range in net pay is still wide (60-100m) and needs testing. The bank said: "Just to put it in context, the net pay on Ngamia (200m) and Twiga South (75m) was doubled after successful flow tests and recoverable resources from these two discoveries are now seen to exceed 250mmboe. If you include Etuko (basin flank play), it is north of 300mmboe before adding Ekales. So, there is a commercial play (at least from a threshold perspective) in the basin."A 'neutral' rating was maintained for the stock while the target price was lifted from 1,155p to 1,161p.The shares were up 1.82% at 362.9p by 11:44 on Thursday.BC