Major Disappointment in Ghana's Oil March

Tullow Oil Plc, the U.K. explorer focused on Africa, fell to the lowest in six weeks after an exploration well in offshore Ghana failed to find oil.

The Onyina-1 well in the Campanian prospect, between the Tweneboa and Jubilee fields in the deepwater Tano license, encountered water-bearing reservoirs, the company said in a statement in London today. The shares closed down 2.1 percent at 1,227 pence, the lowest since Sept. 6.


“The lack of hydrocarbons at this location highlights the high risks of charging and trapping oil in this secondary play,” Angus McCross, exploration director at Tullow, said in the statement.


Tullow has fallen 6 percent this year after Ghana blocked the sale of Kosmos Energy LLC’s stake in the Jubilee field to Exxon Mobil Corp. and plans to start pumping from fields in Uganda were delayed by a tax dispute. Jubilee was discovered in 2007 and has potential resources of 1.8 billion barrels, one of the biggest finds in Africa.

Today’s report “is disappointing but does not change our stance on the shares,” said Peter Hitchens, an analyst at Panmure Gordon & Co., in an e-mailed note to investors. “The company is still in an active drilling program which can add significant shareholder value.”


Tullow, with partners Anadarko Petroleum Corp., Kosmos and Ghana National Petroleum Corp., is investing about $3.35 billion to develop the Jubilee field. The first phase is expected to start pumping 120,000 barrels of oil a day in the first half of next year.