By Alexis Flynn and Jenny Gross
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Tullow Oil PLC (TLW.LN) shares rose nearly 5% Friday after the U.K. oil explorer said it found "good quality" oil in a freshly drilled well off the coast of Ghana, a discovery that further proves up the potential of a deep water area near its giant Jubilee field.
Shares in Africa-focused Tullow helped push the FTSE 100 index higher as investors showed their enthusiasm for the company's latest exploration success. At 1331 GMT, Tullow shares were up 74 pence, or 4.96%, at 1544p. It was the stock's second fillip in three days, jumping 2% Wednesday on news that the company would double its dividend amid record full-year earnings.
Tullow, which has carved out a reputation in recent years as one of the world's most successful prospectors with major crude finds in Ghana, French Guyana and Uganda, is in the midst of a drilling campaign to quantify how much oil and gas is contained in the Tweneboa, Enyenra, and Ntomme fields some 20 kilometers west of Jubilee. Production from Jubilee, discovered in 2007, is expected to reach between 70,000 and 90,000 barrels of oil a day this year.
The company said results from the latest Enyara deep water appraisal well means it is highly likely that high-quality oil flows throughout the reservoir. Two earlier test wells paid off in similar fashion, buoying hopes that the field is home to sizeable amounts of light oil, which is usually more valuable than heavier, sulfurous crudes.
"This bold step out is an excellent result, which is further enhanced by the quality and thickness of the reservoirs found at this downdip location," said Tullow Exploration Director Angus McCoss.
Analysts said the significance of Friday's news lay less in proving that the reservoir contained sufficient commercial quantities of oil but more in what the results showed about the quality of the Enyera field.
"Although we had little doubt about the economic viability of the Tweneboa, Enyenra, and Ntomme complex, we believe that today's results constitute further evidence of the good quality nature of the fluid trapped in the accumulation--which is light oil--and of the lateral connectivity of the Enyenra field," said Barclays Capital's Alessandro Pozzi.
"This is a critical factor that eventually determines capex and recovery factors," he said.
Citigroup, meanwhile, said it would enable Tullow to move ahead with its plan to develop the area in the third quarter.
"Results from the wireline logs and pressure data demonstrated that the oil is in static communication with the oil seen in the other wells across the field, which is encouraging," Citigroup's Michael Alsford said in a note.
-By Alexis Flynn and Jenny Gross, Dow Jones Newswires; 44-20-7842-9471; firstname.lastname@example.org