FUEL exploration heavyweight Tullow Oil yesterday announced the discovery of oil at the Kasamene field in Uganda.
The FTSE 100-listed group confirmed both the Kasamene-3 and Kasamene-3A wells in the Butiaba region of Uganda Block 2 made a discovery along the Wahrindi North fault block, bringing the country one step closer to its first oil production next year.
Exploration director Angus McCoss said: “These Kasamene and Wahrindi North exploratory appraisal results have successfully delineated the upside potential in this immediate area. This takes us a significant step towards first oil in Uganda, which is expected from the Kasamene field in 2011.”
McCoss added that the company continued to work closely with the country’s government on plans to accelerate its exploration and appraisal campaign in the region.
Marc Kofler, analyst at Citi, commented: “While this morning’s update is difficult to translate into direct valuation at this stage, we believe it is encouraging and would expect the stock to outperform.”
Alejandro Demichelis, analyst at Bank of America Merrill Lynch, added: “We see a potential successful water injection system pushing recovery factors north of 35 per cent, offering scope for material resources upgrades in the basin. Its compelling 25 per cent discount to net asset value along with the most active drilling programme in the sector over the next 12 months continues to make Tullow a key holding in European oils.”