The share price of Tullow Oil (LSE: TLW) has fallen 5% so far today, following release of results from a series of recent exploration and appraisal activities that were conducted in two of its onshore Kenya blocks. Tullow operates the 10BB and 13T Blocks on a 50:50 basis with the Africa Oil Corporation.
The company says that hydrocarbon shows were encountered in the Kodos-1 exploration wildcat in Block 10BB, indicating the presence of an active petroleum system. However, it went on to say that reservoirs were mixed quality alluvial sands close to the basin boundary fault.
The well will now be plugged and abandoned, and the the rig moved to drill the second well in the basin at Epir-1, 25 km north of Kodos-1 in a separate sub-basin. Tullow says that, following the encouraging hydrocarbon shows at Kodos-1, further drilling in the greater Kerio Basin can be expected during 2015.
It is also plugging and abandoning the Ekosowan-1 well in block 10BB, which extended the proven oil basin southwards. The company says that follow-up drilling will target the better-developed reservoir that’s expected between Amosing-1 and Ekosowan-1, which is further away from the faulting at the basin margin.
The Ngamia-4 well in Block 10BB successfully encountered up to 120 metres of net hydrocarbon pay, of which up to 80 metres was oil. Tullow says that the well has now been suspended for use in future appraisal and development activities. The rig used will now drill the Ngamia-5 appraisal well, which is aimed at assessing reservoir connectivity in the Ngamia field.
Finally, Tullow reports that four flow tests on the Twiga-2A well in Block 13T were successfully completed, and achieved production rates between 150 and 3,270 barrels of oil per day under natural flow with no depletion. Tullow says that this is the highest oil production rate seen to date in Kenya.
Commenting on the news, exploration director Angus McCoss said:
“The Kodos-1 well is the first test of the Kerio Basin and hydrocarbon shows provide encouragement, indicating the presence of an active petroleum system. The potential of the Kerio Basin remains highly prospective and the rig is now moving to drill the next well, Epir-1, in a sub-basin to the north of Kodos-1.
“South Lokichar Basin activity continued with exploration and appraisal drilling and well testing. The Ekosowan-1 well encountered a significant interval of oil shows however reservoirs at this location were tight. We look forward to stepping out from Ekosowan towards the Amosing oil field in pursuit of better reservoirs. Appraisal and well testing success continues with Ngamia-4 finding a substantial section of oil pay and Twiga-2A recording our highest flow rates to date.“
Following the fall so far today, at 501.2p Tullow’s share price is now down 48% since this last year, compared with dip a of only 4.5% in the FTSE 100 index. And the longer-term makes for even worse reading, with Tullow’s share price having shed 60%, whilst the FTSE 100 has put on 21.5%.
