Tullow gains after successful well boosts oil potential in Kenya

LONDON (Bloomberg) -- Tullow Oil Plc gained after a successful well increased the potential size of oil resources the Africa-focused explorer has discovered in Kenya.

The Etom-2 well in northern Kenya encountered 102 m (335 ft) of net oil pay in two columns, Tullow said in a statement Tuesday. This could increase the potential of the existing Etom discovery, Lionel Therond, an analyst at Standard Bank Group Ltd., said by email. Shares of the company rose as much as 7.7%.

Tullow has found about 2.3 Bbbl of resources in East Africa, with discoveries in Kenya and Uganda, according to its website. The oil remains undeveloped as the London-based company and its partners debate the route of an export pipeline amid a slump in the price of crude.

“We expect management to speak more confidently about the potential for the basin to achieve the 1 Bbbl potential it has previously highlighted,” Barclays Plc analysts led by James Hosie wrote in a note. “Although the oil price is likely to continue dominating near-term investor sentiment, exploration success onshore Kenya should offer a ray of positivity.”

Tullow, which has a 50% stake in the license block containing the Etom discovery, added 6.4% to 161.8 pence at 8:45 a.m. in London. That pared the stock’s loss this year to 61%.