Tullow finds "high quality" oil in Kenya

Tullow Oil announced on Tuesday the discovery of high quality oil in the Ngamia-2 well in Kenya, in which it has a 50% interest.

The well encountered up to 39 meters of net oil pay and 11 meters of net gas pay and appears to have identified a new fault block trap north of the main Ngamia accumulation.

The company has been drilling the well with its partners on the project, Africa Oil.

Tullow said the reservoirs were "high quality", with more than 200 meters of net reservoir sands with good permeability inferred from MDT sampling.

The well has been suspended for testing and the rig will continue to drill up to four additional appraisal wells in the Ngamia field area for testing. A 3D seismic programme is currently being concluded over the field area which should allow for detailed mapping of the fault trends.

Angus McCoss, exploration director with Tullow Oil said, that the find builds on the major basin opening discovery well, Ngamia-1. "The reservoirs were of similar quality and the well will be suspended for testing," he said.

The explorer said the SMP-5 rig had completed testing operations on the Agete-1 well.

"The Agete-1 well test flowed at 500 bopd [barrels of oil per day] and the partnership continue to evaluate this discovery. With five rigs drilling in Kenya and Ethiopia, there is much to look forward to in the second half of the year."

The Weatherford 804 rig is currently drilling the Agete-2 downdip appraisal well and will then move to drill the Etom prospect which is seven km north of the Agete discovery along the basin bounding "string of pearls" trend.

The Sakson PR-5 rig is drilling the Amosing-2 downdip appraisal well, with a planned sidetrack, and will then move to test the North Kerio and Turkana Central Basins by drilling the Kodos and Epir (formerly Aze) prospects respectively.

Other ongoing testing is taking place on the Gardim prospect, located in the Chew Bahir basin in the South Omo block in Ethiopia. The partnership is in discussions on the next prospect to be considered for drilling in this block.

Investor view

On the Interactive Investor discussion board, 'Guestimate' said: "Interesting that they haven't given up on Chew Bahir yet, even though they've drawn a complete blank there so far. I wish they'd get on and drill the South Kerio basin. Have a good feeling about that one."

'brummell' said: "Kentz is another example. Down around 360p a year ago and under 700p a week ago but now its suddenly worth 935p to a buyer after a long period when shares could be pickled up on the cheap. Great for those with the spherical fortitude to buy and hold but another company sold off on the cheap."

The shares were up marginally by 9am on Tuesday to 882p. RBC Capital restated their 'outperform' rating on the stock on Friday with a target price of 1,150p.