Tullow Oil’s Share Price Plunges after Disappointing Drilling Update
iNVEZZ.com, Tuesday, July 23rd: UK explorer Tullow Oil Plc (LON:TLW) reported today that its exploration wells in Mozambique and French Guiana had failed to make discoveries. Tullow Oil’s share price shed more than seven percent in morning trading in London.
**Mozambique Well Fails to Make Discovery**
In a drilling update, London-based Tullow Oil said that its Cachalote-1 exploration well off the coast of Mozambique had encountered gas which was unlikely to be commercial and had not encountered oil. The company said that following completion of logging operations, the well was plugged and abandoned.
Commenting on the drilling results, Tullow Oil’s exploration director Angus McCoss said that the company was going to integrate the data into its regional model to improve chances of unlocking the oil play potential offshore Mozambique. “The potential for discovering oil in this region remains,” McCoss noted. Tullow Oil had drilled the Cachalote-1 exploration well with Norway’s Statoil ASA (OSL:STL). Statoil’s share price was marginally down in morning trading in Oslo today.
**Another French Guiana Disappointment**
Tullow Oil’s drilling results on the other side of the Atlantic were also disappointing, with the GM-ES-4 exploration well in the Cebus prospect in French Guiana showing no indications of hydrocarbons. The company said that the well was currently being plugged and abandoned.
“The Cebus-1 well was an ambitious wildcat exploration well which did not encounter hydrocarbons,” McCoss noted. “The current French Guiana campaign now concludes with the GM-ES-5 well.” Tullow Oil’s partners in French Guiana include oil majors Royal Dutch Shell Plc (LON:RDSA) and France’s Total SA (EPA:FP), as well as two small British explorers, Wessex Exploration Plc (LON:WSX) and Northern
Petroleum Plc (LON:NOP). Northern Petroleum’s share price was more than six percent down in morning trading in London, whereas Wessex Exploration’s share price slumped more than 30 percent. Shell and
Total’s shares held steady despite the announcement.
The GM-ES-5 well was the latest in a series of French Guiana disappointments for Tullow Oil which in April said that its third well targeting the Priodontes prospect off the South American country’s coast had not found “significant hydrocarbons”. In December 2012, Tullow reported that drilling at its Zaedyus 2 appraisal well had failed to find commercial oil deposits.
!m[UK Explorer Fails to Find Oil in Mozambique and French Guiana](/uploads/story/4238/thumbs/pic1_inline.jpg)
Reuters quoted analysts at Morgan Stanley as saying that the Mozambique and French Guiana wells formed only a fraction of Tullow’s exploration portfolio, one which offered significant upside.
Earlier in July, the company upgraded its resource estimates in Kenya. In its trading statement and operational update on July 3, Tullow Oil announced a new oil discovery and doubled its estimates of the depth of the oil resource in the Lokichar basin.
**Tullow Oil’s share price was 7.44 percent down at 1,032.00p in London as of 10:40 BST on 23 July 2013.**
**Wessex Exploration’s share price was 32.24 percent down at 0.830p, while Northern Petroleum’s share price was 6.93 percent down at 29.90p. Shell’s share price was 0.02 percent down at 2,231.00p.**
**Statoil’s share price was 0.30 percent down at 32.90 NOK in Oslo as of 10:14 BST, while Total’s share price was 0.02 percent up at €40.19 in Paris as of 11:33 CEST.**
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.