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Tullow Oil plc (Tullow) issues this Trading Statement and Operational Update in respect of the first half of the 2012 financial year ended 30 June 2012. This is in advance of the Group’s Half-Yearly Results, which are scheduled for release on 25 July 2012. The information contained herein has not been audited and is subject to further review.
Commenting, Aidan Heavey, Chief Executive Said:
“Tullow’s industry-leading exploration success has continued in the first half of 2012 with a major discovery in Kenya, the fourth new basin the Group has opened in five years. We have also completed the $2.9 billion farm-down in Uganda, and made good progress on our development projects in Ghana and Uganda. The on-going remediation of the Jubilee field is progressing well and significant exploration wells are planned for the East African Rift basins, the West African Transform Margin and the twin basins in South America in the second half of 2012. With an exciting programme ahead, Tullow is well placed for continued success over the remainder of the year.”
Exploration drilling in the Kenya Rift Basin commenced in January 2012 with the drilling of the Ngamia-1 wildcat well in Block 10BB. The well has been drilled to a total depth of 2,340 metres, has made a significant light oil discovery and is now being suspended for future flow testing. Oil was encountered in sands throughout a 1,100 metre interval of sediments including a 300 metre thick section of Lokhone Shale, which has good sealing and source rock characteristics. This significant exploration result demonstrates that substantial oil generation has occurred in the South Lokichar Basin, which is one of seven related basins in the Kenya and Ethiopia rift basin acreage, each of which is similar in magnitude to the Lake Albert Rift Basin in Uganda.
Above this important Lokhone Shale in the Upper Lokhone sands, the well encountered over 100 metres of net oil pay in a gross oil bearing sub-interval of 650 metres. Below the Lokhone Shale in the Lower Lokhone Sands, the well encountered a gross oil bearing sub-interval of some 150 metres before intersecting the basin bounding fault which resulted in the well being terminated 360 metres shallower than planned. Whilst oil has been recovered from this lower interval it is not yet possible to determine an accurate estimation of net pay due to the influence of the fault zone. Further away from the fault we expect to encounter the complete Lower Lokhone Sands section of around 250 metres and for reservoir quality to improve.
An accelerated 2D seismic infill programme has already been completed over the discovery to define the outline of the trap and an appraisal programme for the Ngamia discovery is being developed to include flow testing, a 3D seismic survey and further wells to test the extent of the Ngamia discovery away from the basin bounding fault.
The rig is now preparing to move to drill the Twiga-1 well, 30 km away on-trend in Block 13T. Once this drilling has completed it is planned to return to Ngamia-1 for flow testing and standard oil field pumping equipment is being mobilized for this test. Over one hundred leads and prospects have now been identified in seven related basins in the acreage. Those located in the South Lokichar basin, have been substantially de-risked due to their proximity to Ngamia.
An accelerated exploration campaign is now being planned. Further 2D and 3D seismic data will be acquired and additional rigs will be mobilized, including a separate rig to drill the Paipai-1 prospect in Block 10A which is expected to commence drilling in the latter part of the third quarter 2012. In the South Omo block in Ethiopia, a drill-site for the Sabisa-1 prospect is currently under construction and a third rig is expected to arrive and commence drilling in the fourth quarter of 2012.
Whilst the Ngamia discovery has exceeded expectations it will require more exploration and appraisal activity to be completed before commerciality can be declared.
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