Shares in oil explorers Tullow Oil (TLW) and Eco Atlantic Oil & Gas (ECO:AIM) are gushing higher on news of a big exploration success offshore Guyana. Tullow advances 16.4% to 208.5p and Eco is up 98.5% at 135p.
The Jethro-1 exploration well, drilled on the Orinduik licence, has encountered 55 metres of net oil pay. This is the part of an underground reservoir containing oil which it would be economic to produce.
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Tullow Oil says the level of net pay 'supported a recoverable oil resource estimate' which exceeded its pre-drill forecast.
The well was drilled by the Stena Forth drillship to a total depth of 4,400 metres in around 1,350 metres of water.
Evaluation of logging data confirmed Jethro-1 as the first discovery on the Orinduik licence, comprising high-quality oil bearing sandstone reservoirs of Lower Tertiary age.
Tullow Oil said the find significantly de-risked other Tertiary age prospects on the Orinduik licence, including the shallower Joe prospect, which would commence drilling later this month.
Tullow is the operator of Orinduik with a 60% stake while Eco holds 15%, having farmed out part of its interest to French oil major Total which owns the remaining 25%.
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AJ Bell investment director Russ Mould says: ‘Investors don’t have too long to wait to see if this is a one-off or if a repeat performance can be conjured, with drilling on a second well set to get underway imminently.
‘For Eco it demonstrates the benefits of getting in early and then riding on the coat tails of larger partners with deeper pockets like Tullow and French firm Total, which it brought on board last year.
‘For Tullow it represents a return to the kind of exploration success which lay behind its ascent from small cap status to the ranks of the FTSE 100, before a subsequent fall from grace.’
Berenberg analyst Ilkin Karimli says: ‘Importantly, the discovery helps to de-risk other prospects on the Orinduik block, which is estimated to hold total resources of over 4bn barrels, and makes Eco Atlantic an attractive M&A target, in our view.’