Tullow finds oil in Sierra Leone but shares fall - UPDATE

21st Feb 2012 07:05

Following the results of drilling, wireline logs and sample of reservoir fluids, oil and gas giant Tullow Oil has confirmed that one of its exploration wells offshore Sierra Leone has successfully encountered hydrocarbons.However, shares tanked in morning trade on Tuesday, with the stock trading 4% down at 1,537p by 10:37.The Jupiter-1 well, Block SL-07B-11, located over 25km west of the Mercury-1 well which has already discovered oil in the block, is said to have intersected 30m of hydrocarbon pay in the "primary upper cretaceous objective" and did not encounter a hydrocarbon water contact. "The well has been preserved for possible future re-entry, as the area is likely to require additional evaluation," the firm said.While Tullow's Exploration Director Angus McCoss says the results are "encouraging", many analysts have pointed to the fact that the well will need further appraisal to due to the limited information given - a possible reason for the negative market reaction this morning.US oil titan Anadarko is the operator in the block with a 55% interest, while Spanish partner Repsol owns a 25% stake. Tullow has a 20% interest."Jupiter is the third discovery in the Liberian Basin by Tullow and its partners and provides further support for the stratigraphic play in the region," McCoss said."The presence of a working petroleum system producing gas and light oil in the basin is encouraging. Our technical teams will continue evaluating prospectivity across our significant regional acreage position. We will further test the play through the drilling of Mercury-2 in Sierra Leone and Kosrou-1 which is currently drilling in Côte d'Ivoire."BC