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Tullow makes Guyana discovery

Exploration success comes after production guidance downgrade and Ghana well disappointment
August 12, 2019

Tullow Oil (TLW) has delivered the goods with a wildcat well in Guyana, sparking a 16 per cent share price jump. The producer and explorer said it had found 55 metres of net oil pay at the Jethro-1 prospect, which it said supported a recoverable oil resource estimate higher than the 150m barrels of oil (boe) it had previously assigned to the well.  Tullow chief executive Paul McDade said it was a “substantial and high value oil discovery”. The company owns 60 per cent of the  Orinduik block, with Total (25 per cent) and TSX explorer Eco Atlantic (15 per cent) holding the rest.

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There are two more wells to be drilled in the same programme. Jethro-1 is in the 60 per cent-owned Orinduik licence area,  120km from the Guyanese coast. Tullow is moving its drillship quickly on to the next prospect, Joe-1, which Eco Atlantic said could spud by “mid-August”.

RBC analyst Al Stanton said the discovery showed the prospectivity of the area but that more work needed to be done. “The well has resulted in a mitigation of risk of the presence of quality reservoir sands, seal and trap parameters… the last question is about the crude quality in this shallow location,” he said. Tullow has encountered 55m of net pay in a 58m gross sand column – the high ‘net to gross’ signifies a good-quality reservoir with the potential for high productivity and therefore lower developments costs.” RBC expects a result from Joe-1 by the end of September, and further on Mr Stanton said he could see Tullow looking at a farm-out deal for the assets.

Last month, Tullow cut its full-year production guidance to 89,000-93,000 barrels of oil per day (bopd) after previously forecasting 90,000-98,000bopd.  The company said it would now work out appraisal options.