Tullow Oil found favour with investors on Monday after it struck oil in the deepwater Mercury-1 exploration well in Sierra Leone.
FTSE 100-listed Tullow Oil (TLW) found favour with investors on Monday after it struck oil in the deepwater Mercury-1 exploration well in Sierra Leone.
The British oil major said it encountered 135 new feet of oil pay across two Cretaceous-age fan systems.
Operator Anadarko Petroleum - the US partner in BP's (BP.) stricken Gulf of Mexico well - drilled the well to a total depth of 15,950 feet in about 5,250 feet of water, the company said in a statement.
Anadarko said the results of Mercury-1, which is the second deepwater test in the Sierra Leone- Liberian Basin, demonstrated that the stratigraphic trapping systems it had previously identified were working.
In the primary objective, the well hit around 114 net feet of light sweet crude oil of between 34 and 42° API, while an additional net pay of 24° API was encountered in the shallower secondary objective.
"These results continue to build momentum in the basin and enhance our confidence in the team's seismic interpretation and geologic modelling," Anadarko's senior vice president Bob Daniels said.
Tullow, which owns a 10% interest in Mercury-1, said the wellbore was being preserved for potential re-entry, drillstem testing or a down-dip sidetrack to further define the reservoir's extent, quality and deliverability.
Peter Hitchens, analyst at Panmure Gordon, said: "This is another exciting discovery and goes a long way to prove that the company is sitting in a major new hydrocarbon basin that extends from the Jubilee field in Ghana up the coast of West Africa."
Hitchens said the pre-drill estimate for the prospect was 450 million barrels of oil and alone, could add 30p to its asset value of the company.
"Perhaps more excitingly, the partners have identified a further 17 prospects and leads to drill in its contiguous acreage in Sierra Leone and Liberia. We maintain our 'buy' recommendation with a price target of 1,500p," Hitchens added.
On top of its Sierre Leone campaign, Tullow is also pursuing a drilling campaign in Mauritania, Ghana and looking to drill its first well in French Guiana.
http://www.iii.co.uk/articles/13299/tullow-strikes-oil-sierra-leone
