Oil Well Success May Boost Ghana Reserves

... 600 million to 1,200 million barrel
Tullow Oil said Thursday that a successful appraisal well has increased the estimated size of the Jubilee oil field offshore Ghana, a portion of which is subject to a potential bidding war between oil giants ExxonMobil Corp. and China National Offshore Oil Company (CEO).

Tullow did not change its reserve figures for the field, but one analyst said the latest results will probably give a boost to the current estimates for the amount of recoverable oil there.

"Extending the Jubilee field eastwards with the Mahogany-4 well and encountering new hydrocarbon bearing reservoirs is an excellent result and strongly supports our current interpretation of the Jubilee field resources," said Tullow's exploration director Angus McCoss.

Royal Bank of Scotland analyst Phil Corbett said it is "highly likely" the Mahogany-4 result has increased the 600 million to 1,200 million barrel mid-range reserve estimate for Jubilee. "At the very least the Mahogany-4 result gives us more confidence about the value already included in our models," he said.

ExxonMobil Corp. (XOM) joined the Jubilee development last week by agreeing to acquire Kosomos Energy's stake in the two blocks the field straddles for $4 billion. However, that deal could be disrupted by CNOOC, which is contemplating a rival bid for the Kosmos stakes in collaboration with Ghana National Petroleum Corp.

Tullow's decision not to update Jubilee's reserve estimates until it completes two more appraisal wells avoids making this standoff even more complicated, said NCB Stockbrokers analyst Peter Hutton.