Tullow strikes oil again in Kenya -UPDATE

26th Nov 2012 07:15

FTSE 100 explorer Tullow Oil said it had made a second discovery in the Lokichar Basin area of Kenya.The firm said the Twiga South-1 exploration well, in which it holds a 50% stake, had encountered 30 metres of net oil pay with further potential to be assessed on testing.It also encountered a tight fractured rock section with hydrocarbon shows over a gross interval of 796 metres. Twiga South-1 has been drilled to a total depth of 3,250 metres and has been successfully logged and sampled, the company added.The site is the second prospect to be tested in the Lokichar Basin as part of a multi-well drilling campaign in Kenya and Ethiopia.It is located 22km to the north of the Ngamia-1A discovery, made earlier in 2012.Exploration Director Angus McCoss, said this follow on discovery reaffirmed the considerable prospectivity of the Lokichar Basin. "Having significantly expanded our plans in Kenya and Ethiopia, there is much to look forward to as the exploration campaign and testing programme move ahead," he said.Analysts at Deutsche Bank had this to say: "we still believe the Lokichar could deliver 1bn bbls recoverable. However, it is clear from the sell-off in the AOI share price that the market had been discounting a more straightforward progression to 1bn bbls (i.e. the deeper play would contribute in the same way as the Upper Lokhone sands). More wells and any contribution from the deeper play could mean higher development capex and a lower value of barrels in the ground."