TULLOW Oil’s Ghana discovery has significant further upside potential above current market estimates, the group said in a trading statement yesterday.
This is the group’s biggest discovery to date and Tullow has decided to accelerate its assessment of the well to delineate the extent of the find it has in that particular block.
The Belford Dolphin drill ship has secured the rights to drill a further well in the Deepwater Tano block in August, which is the region believed to contain most of the oil reserves.
The group also updated investors on its other key areas of activity including Uganda, and Namibia.
One of the group’s Ugandan prospects the Nzizi-2 well has already been confirmed as containing oil bearing reservoir sands and additional accumulation of gases.
In South Asia, Tullow has exploration, development and production interests in Pakistan and Bangladesh and exploration interests in India.
The Field Development Plan for the Bangora/Lalmai field was approved by the Bangladesh Government in May 2007. In India and Pakistan plans are under way for a multi-well exploration drilling campaign to commence later this year.
Working interest production for the group is currently 75,000 barrels of oil per day (boepd) and is now expected to average 72-75,000 boepd for 2007.
Commenting yesterday, Tullow chief executive Aidan Heavey said the business had reached new levels in terms of scale and opportunity in the first half of 2007.
“The Mahogany well in Ghana has provided the group’s largest ever discovery, we have recorded excellent results from Uganda and our African assets have delivered a strong production performance,” he said.
Future capital allocation will focus on optimising returns and accelerating activities on these high potential projects, he said.
That should result in a scaling back the group’s British activities where it is involved in high cost production, he said.
“We are confident of further success in the second half of the year,” Mr Heavey said.
Analysts reacted positively to yesterday’s trading update from the group, listed in both London and Dublin.
Davys have lifted their share price target to 575p per share, a 13% premium to its net asset value of 508p.
Analyst Job Langrboek reckons the assets in Uganda and Ghana still have an upside potential of 58% and 21% respectively.
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