Tuskar Resources has flowed oil at a rate of 9,500 barrels of oil per day from its offshore concession in the Niger Delta, Nigeria. The shares responded enthusiastically to the announcement and jumped from 43/4p sterling to 61/2p on the London market in heavy turnover. The flow rate is well ahead of its expectations and it should result in a positive cash flow for the group for a five year period from next year. Tuskar drilled the Obe-4 well located in offshore concession OML 110 to a depth of 9,315 feet and encountered 135 feet of oil pay with high quality oil from two reservoirs with an average gravity of 39 degrees API which makes it a commercial proposition. The result is considerably better than that encountered by other adjacent operators. The Obe-1 well, 500 metres south west of the Obe-4, flowed oil at 3,500 barrels per day, while the Obe-3, 350 metre north east of the Obe-4, flowed oil at 1,850 barrels per say. Tuskar will now drill in Obe-5 well which will be put into production together with Obe-4 early next year, Tuskar's managing director, Mr Emmet Brown, said. Tuskar estimates there are 12 million to 14 million barrels of recoverable reserves. It holds a 40 per cent working interest in the OML 110 concession under an agreement which entitles the company to 75 per cent of the first 50 million barrels of oil produced. Tuskar has to pay all the costs which it estimates at around $25 million. The company is not making any cash flow projections. However, as the reserves are well below 50 million barrels, it will be entitled to 75 per cent of the profits after all the costs are met. Tuskar has not yet worked out how the $25 million will be financed but it could be a mixture of equity and loans. It could extend its existing loan agreement with its principal shareholder, the Houston based Camac/Allied Energy Group. Camac/Allied is owned by a Nigerian national based in Houston. Tuskar paid £7.7 (Irish pounds) million in new Tuskar shares - now valued at £41 million - for its 40 per cent interest in the OML 110 concession. This gave Camac/Allied an effective 65 per cent stake in the enlarged Tuskar.

Market sources estimate around $50 million net revenue from the Obe wells could be generated over a five year period. This would entitle Tuskar to about $37.5 million or $7.5 million per annum (£5.4 million). Mr Brown said the oil find only represents a very small part of the oil province under concession. "We believe there are several more development wells with a potential of 500 million barrels of oil."