SHARES IN Tullow Oil surged almost 17 per cent in London yesterday after the company announced a discovery off the coast of French Guiana in South America.
The company said yesterday that it had discovered oil during the first of a series of planned drills in the Zaedyus prospect in the Atlantic Ocean off the South American country’s coast.
Tullow’s drilling encountered a 72m column of oil, demonstrating that Zaedyus does hold hydrocarbons. The company has six other drills planned for the area in coming months.
Investors responded to the news by rushing to buy the company’s stock on the Dublin and London markets. At one point in afternoon trade, it was 17 per cent up at £14.35 sterling in London, where most of the trade in its shares takes place.
It fell back from these highs subsequently, but was one of the few shares of any note to make good ground in either market.
Investors see the find as significant. The region shares the same geological characteristics as Tullow’s Jubilee Field in Ghana, that came into production last year and will pump 120,000 barrels of oil a day when it reaches full capacity in 2013.
It also opens up the possibility that Tullow can add another territory to its portfolio. It has licences in 22 countries but many of them are focused on Africa.
Chief executive Aidan Heavey explained that Tullow targeted French Guiana its geology mirrors that of the Jubilee Field.
“After we found Ghana four years ago, we looked at areas where the geology could be similar,” he said.
He pointed out that Africa and South America were joined at one stage in pre-history, and thus have similar geological characteristics.
The Irish company signed up exploration acreage in French Guiana, Suriname and Guyana. Tullow now believes it did the right thing.
Mr Heavey said that, within the exploration industry, it had been generally accepted that there was no oil in this region.
“It’s nice to see that our theory is correct, that the industry theory is not correct,” he said. “If we had just found traces of oil, we would have been happy, just to prove the system worked.”
Tullow’s partners in Zaedyus are Shell, Total and Northpet. The Irish company holds a 27.5 per cent stake in the project. Mr Heavey said “The well has to be appraised and we have a lot more exploration work to do, there’s a long way to go.”
