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Tullow Oil Pins Hopes On Kenya To Sway Doubters

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Tullow Starts Development Plans for New Kenyan Oil Region

Reuters

LONDON, Jan 15 (Reuters) - Britain's Tullow Oil is pinning its hopes on two new discoveries in northern Kenya to turn the region into a significant crude producer and regain its reputation as a successful explorer.

The group, whose main operations are in Africa but which also has exploration licences from Uruguay to Greenland, doubled its estimate on Wednesday of its discovery in Kenya's South Lokichar basin to 600 million barrels following the two successful well results.

Tullow made its name over the past decade opening new oil areas in Ghana and Uganda, but after a string of disappointing drilling results it lost a quarter of its value in 2013 and was the worst-performing stock in the FTSE 100 outside the mining sector.

The basin, one of eight in Kenya to which Tullow has exposure, had the potential to hold over one billion barrels, the company said. That compares with Uganda's estimated 3.5 billion barrels of reserves, which when production starts could turn Kenya's neighbour into a top 50 oil producer.

"This is a very exciting area and this one basin alone looks pretty good, if not better than Uganda," Chief Executive Aidan Heavey said in an interview.

Heavey founded the group, which was worth over 14 billion pounds ($23 billion) at its peak in early 2012, in the Irish town of Tullow to tap into the potential of overlooked oil fields in Africa.

Tullow shares rose 1.5 percent in early moves but were trading down 0.3 percent at 854 pence at 1253 GMT, as the success in Kenya was muted by a slightly lower than expected production outlook for this year. The group - whose stock rose to well over 15 pounds in 2012 - now has a market value of almost 8 billion pounds.

Tullow is planning to drill 20 additional wells over the next two years, giving it the potential to discover more oil in Northern Kenya than it has in Uganda, particularly as it drills in the other seven basins.


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