Cairn Energy Plc said on Jan. 4 it carried out its first successful production test at its oil fields in Senegal on Africa's west coast, sending its shares up as much as 9%.
The company said it had produced high-quality oil at a rate of around 8,000 barrels per day (bbl/d) from its SNE-2 well around 100 km (62 miles) off the coast of Senegal.
The West African country is one the few where oil and gas companies, hit by a plunge in oil prices, are still investing to find new resources. Most companies have cut exploration budgets and are focusing on projects that offer immediate returns.
At least two analysts said Cairn Energy's production rate at the Senegal well was better than expected and removed significant uncertainty about the quality of the reservoir, which Cairn Energy estimates could hold more than a billion barrels of oil.
"I think this confirms a strong potential for commercial discovery," RBC Capital Markets analyst Nathan Piper told Reuters.
Investors have been awaiting results from Cairn Energy's Senegal project to get a better understanding of the potential of the newly explored basin.
"The results help to confirm the overall scale and extent of the resource base in Senegal and further appraisal activity is expected to lead to future revision of the estimates," Chief Executive Simon Thomson said.
Cairn Energy, which focuses purely on exploration, also said on Monday it produced "relatively low quality" oil at a rate of 1,000 bbl/d at another depth in the same well.
The company is the operator and 40% owner of three blocks off the coast of Senegal. Other stakeholders include oil major ConocoPhillips, which owns 35 percent.
Shares in the company were up 1.4% at 160 pence at 4:49 a.m. CST (10:49 GMT), having given back some of their earlier gains.
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