Tullow Oil (LSE: TLW) announced this morning that that the 31/3-4 exploration well it has drilled on the Mantra prospect, offshore of Norway has encountered reservoir quality sandstone, but that all intervals were “water wet”. This result means that the well — which is located approximately 10km north of the Troll C platform in the North Sea — is not viable. The well will now be logged before it’s plugged and then abandoned.
Earlier this month the oil exploration company reported that it was to plug and abandon the Tultule-1 wildcat well in Ethiopia. The well was targeting a reservoir section similar to the sands drilled in the nearby Sabisa-1, but was found to be dry. There was some consolation in the fact that gas shows reaffirmed the presence of a hydrocarbon source in the region, and the results will now be analysed to determine the direction of future exploration in the area.
In an interim management statement issued just over a month ago, Tullow Oil sought to reassure its shareholders, with news that production for 2013 was expected to be between 84,000 and 88,000 barrels of oil equivalent a day (boepd) — an increase of between 6-11% on the level seen in 2012. It also reported that the Wisting Central light oil discovery opens a new basin in the Barents Sea, offshore ofNorway, and that it has “material upcoming drilling campaigns” in Kenya, Ethiopia, Mauritania, Norway and Guinea.
Tullow Oil’s share price has experienced a severe decline in recent months, falling more than 33% over the course of 2012, and by almost half since its peak in February 2012. However, despite this fall, long-term investors in the company have enjoyed gains of almost 900% since the start of 2004.
