Tullow Oil Plc (TLW) made two new discoveries in Kenya, boosting prospects for turning East Africa’s largest economy into an oil exporter.
The U.K. oil explorer doubled its Kenyan resource estimates to more than 600 million barrels after the Amosing and Ewoi wells found crude, Tullow said today in a statement. The company, which plans more than 20 wells in northern Kenya over the next two years, said it had started preliminary design work on a pipeline to an export terminal.
“Kenya is one of our core and key areas going forward,” Tullow Chief Executive Officer Aidan Heavey said in a phone interview. “We are also starting discussions with the government now on the development plans.”
Kenya may become East Africa’s first oil exporter as soon as 2016 as Tullow and its partner Africa Oil Corp. (AOI) continue to explore the Lokichar Basin in the north of country. Tullow, which works with France’s Total SA and China’s Cnooc Ltd. to develop fields in neighboring Uganda, has plans to combine oil exports from the two countries through one pipeline network.
The Amosing well drilling results “significantly” exceeded expectations in Block 10BB, Africa Oil said in a separate statement. The companies agreed to relinquish their license to Block 10A, where the Paipai well discovered gas last year.
“It’s very remote, we really have enough to do with a lot of basins,” Heavey said. “We are going to concentrate on the oil basins.”
Tullow’s blocks in northern Kenya may be found to hold more than 1 billion barrels of oil resources as drilling continues, the company’s exploration chief, Angus McCoss, said in today’s statement.
“Tullow’s exploration in Kenya continues to deliver,” Oswald Clint, an analyst at Sanford C. Bernstein & Co. in London, wrote in an e-mailed report. “Perhaps more excitingly, this year we expect to see three completely undrilled East African basins targeted from Tullow’s onshore acreage in Kenya and Ethiopia.”
Tullow also reported today a $730 million exploration charge mostly because of unsuccessful wells off French Guiana, Mozambique and Norway.
The shares rose 0.8 percent to 863 pence in London. Africa Oil climbed 3.1 percent to 58.5 kronor in Stockholm.
Tullow, which operates Ghana’s largest oil field, expects to produce 79,000 barrels to 85,000 barrels a day this year after output rose 6.3 percent to 84,200 barrels of oil equivalent a day last year.
Last-year revenue rose 11 percent to $2.6 billion from a year earlier. Investments in projects will jump 22 percent to $2.2 billion this year, London-based Tullow said today.-businessweek.com