Tullow Increases Stake in Horne Gas Discovery

Tullow Oil has agreed to purchase from BP for the sum of £2,269,000, plus a contingent payment of £500,000, interests in three North Sea licenses. The licenses cover various equity interests in five part blocks in the Southern Gas Basin, due south of the Thames field production complex in which Tullow has the largest equity interest.

The interests agreed to be acquired by Tullow from BP are as follows:

License P133: Blocks 53/3a and b 22.22%
License P786: Blocks 53/3c and d 58.83%
License P852: Block 53/4bF1 12.00%

Subject to Department of Trade and Industry approval, Tullow will succeed BP as Operator for Blocks 53/3c and d.

Two of the blocks, 53/3c (in which Tullow now has an interest of 73.83%) and 53/4bF1, contain the Horne gas discovery which was made in 1992 by well 53/3c-3. On a production test the well flowed gas at a maximum rate of 55 million cubic feet per day from a good quality Rotliegendes sandstone reservoir.

Tullow will seek to undertake an early development of Horne, together with the nearby Wren gas discovery (located in Block 53/4b) in which Tullow already has a 40% interest.

In addition to the development possibilities, the acreage contains a number of promising prospects and leads as mapped on the latest 3-D seismic, with potential for additional reserves from the generally prolific Rotliegendes reservoir sands. It is anticipated that at least one well will be drilled in 2004 to test the highest ranked prospects.

John Lander, Managing Director of Tullow Oil UK Limited stated: "The acquisition of these important and highly prospective interests, close to one of our producing hubs, fits with our strategy of creating value through targeted expansion within our core areas. With this transaction, Tullow is well placed to repeat in the Thames area the success of the CMSIII development."