Shares of Tullow Oil jumped more than 9 per cent yesterday after the company said it had found three new oil-bearing zones at its Kingfisher well in Uganda.
In an update released in conjunction with its project partner Heritage Oil, Tullow said that following on from successful drilling last year at the site, it had now drilled deeper and encountered three additional oil-bearing zones totalling 40 metres.
The current finds are at between 2,260 and 2,370m and Tullow intends to continue drilling down to a maximum depth of 4,000m to assess the well's commercial potential. It estimates this should take about 45 days.
Job Langbroek, a commodities analyst at Davy, welcomed the announcement, saying that while no definitive statement can be made until the well is flow-tested, the thickness of the recent zones bodes well both in terms of volumes and flow rates.
"Regardless of what is now found deeper down, the two oil discoveries so far suggest that Kingfisher should be considered a success as an exploration well," he said in a note to investors.
The shares rose 52 cent, to €6.14 in Dublin, though volumes were light with only 49,494 units changing hands. In London, however, where the stock is traditionally busier, demand was strong, with more than 19 million shares trading. It closed up 7.2 per cent, or 27 pence, at £4.03.
In November, Tullow and Heritage said they had discovered sweet light oil flowing from two zones at a rate of 4,120 barrels a day. Since then analysts and investors have been awaiting new news from the region, which is viewed as a very exciting prospect for the group.
Tullow has recently taken over Australian rival Hardman Resources in a deal worth about €865 million, giving it increased acreage in Uganda.
