Tullow Oil has made a large oil discovery in Guyana, the company said on Aug. 12, sending its share price soaring on expectations that it will develop a productive field in the oil-rich country.
The discovery at the closely watched Jethro-1 well in the Orinduik Block offshore Guyana follows a number of recent exploration successes by Exxon Mobil Corp. in the neighboring Stabroek Block, with discovered oil reserves of more than 5 billion barrels.
Tullow CEO Paul McDade said Jethro-1 is expected to hold more than 100 million recoverable barrels of oil, in excess of expectations. The company will start drilling a second well, Joe-1, this month.
“It looks like we have something we would develop. It looks like we have a long-term business in Guyana,” McDade told Reuters. Guyana has no oil output as yet, though Exxon is expected to start producing next year.
Tullow shares jumped more than 17% by 08:47 GMT and were the top gainer in the FTSE 250 mid-cap index.
The results from the two wells, as well a third prospect in the nearby Kanuku Block, will be appraised next year with the aim of moving to quick development, McDade said.
“We’re hopeful this is not an isolated result, that there will be more discoveries” he added.
Tullow operates the Orinduik Block with a 60% stake, while France’s Total and Toronto-listed Eco Atlantic each own 15%, with Qatar Petroleum holding the remaining 10%.
“This is a revolutionary moment for Eco,” Eco Atlantic CEO Gil Holzman told Reuters. Eco’s share price nearly doubled to 134.2 pence.
Eco sold part of its stake to Total last year and the French oil giant in turn sold 40% of its stake to Qatar Petroleum last month.
The discovery gives London-based Tullow a boost after operational issues at its flagship field in Ghana and delays to projects in East Africa.
“This is a strategy-shifting opportunity for Tullow and a company-making opportunity for junior partner Eco,” RBC Capital Markets analyst Al Stanton said. “A new wave of exploration success could also provide a shot-in-the-arm for larger partners Total and Qatar Petroleum.”
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