Tullow raises stakes in Kenya oil search with $34m deal

Lion Energy held 25 per cent interest in Block A and will reduce its stake in Block 10 BB by half to 10 per cent.

Tullow Oil’s expenditure cap of $23.75 million will cover seismic tests in the blocks and drilling costs for at least 2 wells.

Once the expenditure cap has been met, Africa Oil will be responsible for its working interest share of future costs. 

“The transaction also means that any resultant discoveries will be operated by one of the main partners in the proposed pipeline project to export crude from this highly prospective developing region,” said Mr Hill.

Exploration activities in Kenya have been scaled up following up discoveries of oil in Uganda, natural gas in Tanzania and methane in Rwanda, all with rock structures similar to those of zones mapped for search in Kenya.

Experts say the discoveries have made it easier for smaller companies to raise funding for exploration in Eastern Africa, stretching from Ethiopia to Mozambique.

That has informed the transfer of exploration rights - known as farm ins - including the transfer of East African Petroleum (EAX) interests to Afren.

More rights

“Farm in farm outs is normal practice. Speculation will continue until oil is discovered, “added an industry expert who did not ant to be named.

Africa Oil which last year bought Block 10BB for $10 million from Turkana Oil Drilling Company and has negotiated to acquire more rights in block 12A and 13T presently held by Canada’s Platform.

This would entrench it largest owner of exploration acreage in Kenya.