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Independent oil and gas producer, Tullow Oil plc (LSE:TLW), was one of the biggest losers on the London Stock Exchange today after the company’s exploration well in a deepwater licence in offshore Ghana, Western Africa found little oil, disappointing investors, who anticipated a repeat success of July’s discovery from the same area.
The Okure-1 exploration well, the second of the three-well exploration programme within the Deepwater Tano Licence during the second half of 2012, encountered light oil of 40 degrees API but yielded low net to gross oil bearing, logged at 17 metres and which, according to the Tullow, is not connected to the oil and gas discoveries within the 1,400-square kilometre acreage.
Tullow’s recent exploration well in the said licence, the Wawa-1 well, encountered 20 metres of gas condensate and 13 metres of oil net pay back in July 2012.
The company has two exploration licences in Ghana that are due to expire in January 2013. Tullow operates the Deepwater Tano, which has yielded successful discoveries, including Tweneboa, Enyenra, Ntomme, and Jubilee, which is set to exceed production of 90,000 barrels of oil per day by the year end.
Disposal and Acquisition
In a separate statement, Tullow announced it is to dispose its non-core assets in the UK and Dutch Southern North Sea assets that pump 18,000 bopd in aggregate, whilst at the same time agreed to acquire a Norwegian exploration company, as part of the firm’s refocusing of business.
The acquisition of Spring Energy Norway AS is valued at US$372.3 million, to be adjusted for working capital, will have an effectivity date of 1st September 2012. According to Tullow, Spring’s exploration assets offer risked prospective resources of about 230 million barrels of oil equivalents as well as existing reserves of about 24 mmboe.
“These transactions are part of an ongoing process of carefully refocusing our business and ensuring efficient allocation of capital by monetising non-core assets and re-investing the proceeds in high potential oil exploration,” Tullow’s Chief Executive, Aidan Heavey, stated.
Market Value Downgrade
Shares of the FTSE 100 constituent dropped as much as 91 pence, or 7.2%, to £11.65 a couple of hours after the company updated the market of the well results.
Last week, Tullow shares also suffered a drop of 5.76% to £12.92 after its appraisal well in French Guiana, South America did not encounter hydrocarbon of commercial quantity. The company has lost over a billion pounds of its market value due since then.
At 1:50 PM GMT, shares barely recovered and were still down 5.9% to £11.82 a share with over four million shares traded.
