Tullow Oil share price plunges on drilling results in Kenya
iNVEZZ.com, Thursday, March 27: Shares in Tullow Oil (LON:TLW) fell the most in more than six weeks today, after the oil explorer said a test well in Kenya failed to find viable crude deposits.
The company made the announcement in an update on Blocks 10BB and 13T onshore Kenya, in which Tullow and partner Africa Oil Corp each have a 50 percent stake.
The two partners have found enough oil in Kenya to make local field development commercially viable. The companies expect to start production and possible sales as soon as 2016, making the first oil exports from East Africa.
According to today’s statement, the Emong-1 exploration well in Block 13T was drilled to a final depth of 1,394 metres to test a structure directly across the main basin bounding fault at the block, but “encountered poorly developed oil-bearing reservoir sands”. Tullow said that, as such, it believes the main basin bounding fault controls the distribution of oil reservoirs in this area but should not effect the potential of its Ngamia oil accumulation four kilometres from the site.
The partners also drilled the Etuko-2 well in Block 10BB, which was “designed to evaluate a very shallow reservoir zone,” Tullow noted. The well was drilled to 650 metres depth and “flowed water with oil shows.”
Tullow’s exploration director, Angus McCoss, said: “The early exploration, appraisal and testing activities onshore Kenya are giving us significant technical and operational insights for further optimising and accelerating the development of the basin.” He added that the company’s focus remains on “continuing to explore and appraise our first successful basin, as well as stepping out into several untested basins, which together form a chain of prospective basins that have the potential to become a transformational new oil province.”
**Tullow Oil share price falls most in six weeks**
Tullow Oil’s share price fell the most in more than six weeks in London trading today. At one point of the day, the stock was trading 3.9 percent lower at 746.5p — the biggest intraday decline since February 13. The share price was 2.8 percent down at 758.50p as of 15:06 UTC.
According to AnalystRatingsNetwork data, one research analyst has a ‘sell’ rating on the FTSE 100-listed oil and gas company, nine have it as a ‘hold’ and 16 rate it as a ‘buy’. The stock’s average rating is ‘buy’ with a consensus price target of 1,105.20p.
**As of 14:52 UTC, buy Tullow Oil shares at 757.50p.**
**As of 14:52 UTC, sell Tullow Oil shares at 757.00p.**