logo-loader

Oil Column: Tullow boosted by latest oil discovery in Kenya

Published: 10:37 26 Sep 2013 EDT

no_picture_pai

There are few things that catch the attentions of investors quite like an oil discovery.

And with its history of exploration success this is one of the main attractions of Tullow Oil (LON:TLW), which made another significant find in Kenya today.

The mind’s eye conjures the kind of imagery seen in Hollywood movies - like the monstrous column of oil gushing through the top of Daniel Day Lewis’s wooden rig in “There will be blood”.

Whether we would all be less or more impressed by the high tech, but much less cinematic, reality of contemporary oil exploration, I’m not sure.

Nonetheless, exploration successes remain one of the most potent value catalysts in the oil business, just ask any investor holding Gulf Keystone shares back in August 2009.

For explorers the size of GKP (at that time) these kinds of discoveries really are ‘company makers’.

But, effective exploration still remains the lifeblood of many an oil giant.

While the shares of oil majors are rarely moved by the drill-bit directly, and many firms prefer to buy in their oil projects via M&A, exploration and development is still among the primary ways to replenish reserves.

As such the news of Tullow Oil’s fourth consecutive discovery in Kenya was, no doubt, a welcome boost for Tullow investor.

Tullow has a reputation synonymous with exploration success and in northern Kenya it is carving out a new oil province.

The first four exploration wells have all struck oil, a fifth well is currently being drilled and the pace of activity will soon step up another gear with a new rig soon joining the campaign.

Tullow’s exploration director Angus McCoss today said: "This success at the Ekales-1 wildcat is further evidence of the exceptional oil potential of our East African Rift Basin acreage.”

“Having opened the first basin with the Ngamia-1 well last year, we are now increasing the pace of exploration in Kenya aiming for 12 wells over the next 12 months."

 

In the City, Credit Suisse said that a commercial play now exists in the basin, as the investment banking heavyweight tacked another 6p per share to its target price for the positive result – it’s target currently stands at 1,161p (current price 1,062p).

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

25 minutes ago