Tullow strikes oil in French Guiana

LONDON,  (Reuters) – London-based explorer Tullow Oil   said it had struck oil offshore French Guiana, raising  the prospect of the opening of a major offshore oil producing  province in South America and boosting its shares.
The company, and others, have made big discoveries offshore  Ghana, namely the multi-billion barrel Jubilee field, and an oil  strike in Sierra Leone that suggests the finds extend all along  the coast.
Tullow’s Zaedyus well in French Guiana, drilled in more than  2,000 metres of water and at a cost of some $200 million, was  tapping rock formations laid before Africa and South America  separated millions of years ago.
The company, and partners Royal Dutch Shell Plc <RDSa.L>,  with 45 percent and France’s Total with 25 percent,  believed the oil-rich west African geology would be replicated  in South America.
“Our Atlantic twin basin concept has proven to be valid,”  Tullow’s exploration director Angus McCoss said on an investor  call.
Tullow’s geological theory is not without precedent. In the  past decade, fields with tens of billions of barrels of oil have  been found offshore Brazil in reservoirs that were formed when  the two continents were attached.
The high-risk nature of the venture was reflected in the  terms the companies received from the government, McCoss said,  suggesting any oil produced will yield good margins.
Tullow shares traded up 11.3 percent at 1,366 pence at 1035  GMT, the biggest gainer on the FTSE 100 index .
BoA Merrill Lynch raised its net asset value of the company   by 55 pence per share. “We could see the resources at Zaedyus  growing over time,” it said in a research note.
Tullow operates the Guyane Maritime licence and holds a 27.5  percent stake. Northpet — a company owned by Northern Petroleum  and Wessex Exploration — has a 2.5 percent holding.
Northern Petroleum shares traded up 29.2 percent while  Wessex soared 36.3 percent.
Tullow, Europe’s largest listed explorer by market  capitalisation, plans to drill wells in neighbouring Guyana and  Suriname next, with the French Guiana find making success there  look more likely.
“We are pleased with the preliminary results of this first  deepwater well offshore French Guiana,” said Dave Lawrence,  executive vice-president of exploration and commercial at Shell.
“We are early in the evaluation, but the initial results are  encouraging for this new play.”
The well was drilled to a depth of 5,711 metres and drilling  will continue beyond 6,000 metres.