Tullow success inspires Mandera oil explorer to start work

UK oil and gas explorer Tower Resources says it will drill a well in its Mandera block by year end or next year as activity in north eastern Kenya picks up.

The London Stock Exchange (LSE)-listed explorer said it decided to go ahead with the drilling programme after encouragement by peers who have successfully drilled neighbouring blocks.

The firm said the successive finds by Tullow Oil, which is prospecting in neighbouring blocks, has made the case for drilling of a well on the block.

Tower has 15 per cent interest in Block 2B located in the Mandera Basin, which it bought for Sh4.3 billion in June from Lion Petroleum in a move that saw the latter reduce its stake to 30 per cent from 45 per cent.

Premier Oil holds the remaining 55 per cent stake.

“Tower recognises the Anza Basin as a potential analogue to the recently successful discoveries of Africa Oil and Tullow in the Lokichar basin to the west,” said the explorer when releasing its half year results.

Tower chief executive Graeme Thomson said the firm expects that its focus in future will be on its Kenyan operations, which it expects will prove more lucky than other areas on the continent where it has interests.

“Despite the Namibia drilling programme being a disappointment for us, our near-term drilling in Kenya is evidence of the prudent early steps which were taken to turn Tower into a pan-African explorer with a broadening portfolio of high-impact exploration opportunities,” said Mr Thomson in a statement.

The explorer also has interests in Zambia, South Africa and Western Sahara.

Other explorers have equally been encouraged by Tullow finds. Afren, which is also listed on the LSE, is planning to drill a well on its Block-1 also on the Mandera Basin and has made applications to the National Environment Management Authority.

Tullow Oil of the UK plans to drill two wells in Kerio Basin (Epir-1) and North Turkana (Engomo-1) by the end of the year while Simba Energy of Canada is looking for a partner to see it through further exploration on its Block 2A in Mandera Basin.

Simba is working with Ernst & Young London office to help it get a partner.

A pickup in activity is expected to be a boon for oil field services firms such as TransCentury, KK Securities and commercial banks. Barclay Bank is among lenders eyeing the sector.

“The lender will seek new deal in the nascent oil and gas industry while also maintaining focus on the lucrative SME sector,” said a report on Barclays Bank by Genghis Capital.