Capital Markets

Tullow shares drop after oil well find boost

RIG

An oil rig in Turkana. Tullow, said that work on the two wells dubbed Amosing-1 and Etuko-1 in Block 10BB in Turkana East will be stepped up. Photo/FILE

British exploration firm Tullow Oil’s shares dropped by nearly a percentage point in yesterday’s trading, losing some of the gains it recorded on Friday following news of yet another oil well discovery in Turkana.

The London Stock Exchange-listed oil and gas explorer’s stock lost 8.50 British pence to close at 878.50 pence (about Sh1,212).

On Friday, the Tullow share price had risen by 2.4 per cent after it announced that it had discovered 100 metres of oil at the Agete-1 exploratory well.

“This discovery de-risks several follow-on prospects located to the north and on trend with the Twiga South, Ekales, and Ngamia oil discoveries and adds to the significant resource base already discovered,” said Tullow’s exploratory partner in Turkana, Africa Oil Corporation.

The new find at Agate is the fifth consecutive wildcat discovery since Tullow began exploratory drilling in the semi-arid region in 2012. The oil finds have boosted Kenya’s profile as an investment destination.

Two weeks ago Tullow’s stock dropped by 1.53 per cent following suspension of drilling activities in Turkana after protests by locals who wanted more job opportunities.

“We will have at least six  rigs full time across Kenya and Ethiopia for the foreseeable future and with our recent fund raising are well placed to not only drill and appraise this basin but to drill basin opening wells in the most prospective new areas in the coming 18 months,” said the CEO of Africa Oil, Keith Hill.

Canadian firm Africa Oil raised Sh38.3 billion ($450 million) through a private placement while Tullow has floated a Sh42.5 billion ($500 million) bond to raise money for repayment of debts.

Other activities of Tullow in Africa include the production in Ghana and the confirmed commercial viability in Uganda. It is awaiting government approval in Uganda to start production.

Tullow and its exploring partner have said they would open discussions with the Kenya government to map out strategies for starting exploitation of already discovered resources at Lokichar. In the six months to June the firm had discovered massive oil deposits with a net pay of more than 40 metres in Etuko-1.

Tests on its other oil wells – Twiga-1 and Ngamia-1 have confirmed the two have a potential of recoverable 250 million barrels of oil.