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21.10.2010 Business & Finance

Tullow Oil’s major prospect in Ghana turns into major disappointment

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Amos anyimadu
major disappointment in ghana's oil march
Thu Oct 21, 2010 11:24
Thursday, October 21, 2010 by Sergei Balashov Shares in Tullow Oil (LON:TLW) were down 3% in early trade after the oil and gas major's Onyina-1 exploration well in the Deepwater Tano licence offshore Ghana encountered water bearing reservoirs, which broker finnCap called a “major disappointment”.

The well was drilled to explore a large Campanian prospect between the Tweneboa and Jubilee fields in the northeast of the Deepwater Tano Licence that Tullow Oil said was high risk.

The company said this “negative test has enabled further refinement of our exploration and relinquishment strategy offshore Ghana.”

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“Our main focus remains on the lower risk primary play, the deeper more prospective Turonian reservoirs, where we have had such outstanding success with Jubilee, Tweneboa and Owo,” said exploration director of Tullow Oil Angus McCoss.

FinnCap reacted to the news in its 'Morning Report', noting that Onyina was among the largest remaining prospects in Tullow's current drilling programme and was by far the most significant well.

According to finnCap, analysts and investors are now starting to see Tullow more as a development and appraisal company rather than a high impact exploration player.

“As a result, this is a major disappointment and we expect significant downgrades in the market,” said the note.

The prospect, which was targeting an estimated 700 million barrels (mmbbl), was initially valued at 18 pence per share. Following today's announcement, finnCap removed this from its total net asset value (NAV) estimate, lowering it to 787 pence per share.

The broker left its target price of 1,000 pence unchanged, but reiterated its “sell” recommendation for the stock.

Tullow Oil last traded at 1,214 pence.
The rig will now move to the Jubilee Unit to assist in the preparations for first oil later in 2010.

Tullow Oil holds a 49.95% interest and operates the licence. Texas-headquartered major Anadarko Petroleum (NYSE:APC), which also had a 25% WI (working interest) in BP's (LON:BP) infamous Macondo prospect in the Gulf of Mexico, owns an 18% stake in Tano.

Tullow Falls After Ghana Exploration Well Fails to Find Oil

By Brian Swint - Oct 21, 2010 Tullow Oil Plc, the U.K. explorer focused on Africa, fell the most in six weeks in London after an exploration well in offshore Ghana failed to find oil.

The Onyina-1 well in the Campanian prospect, between the Tweneboa and Jubilee fields in the deepwater Tano license, encountered water-bearing reservoirs, the company said in a statement in London today. The shares dropped 3.2 percent to 1,213 pence, the biggest decline since Sept. 3, at 9:22 a.m. local time

“The lack of hydrocarbons at this location highlights the high risks of charging and trapping oil in this secondary play,” Angus McCross, exploration director at Tullow, said in the statement.

Tullow has fallen 7 percent this year after Ghana blocked the sale of Kosmos Energy LLC's stake in the Jubilee field to Exxon Mobil Corp., and plans to start pumping from fields in Uganda were delayed by a tax dispute. Jubilee was discovered in 2007 and has potential resources of 1.8 billion barrels, one of the biggest finds

major disappointment in ghana's oil march 3 - smart word on Tullow before the bad newsby Amos Anyimadu on Thursday, October 21, 2010 at 11:18am

October 20, 2010 WednesdayTullow Oil [FTSE 100; United Kingdom] decreases 1.0% on low volume October 20, 2010

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