Exploration company Tullow Oil said today that its latest drilling success at the Etuko-1 well in Kenya confirmed the commerciality of fields there.
The company said that combined with output from neighbour Uganda, a pipeline from the well could deliver 500,000 barrels a day by 2018.
Tullow also said today that its first-half net profit for 2013 fell to $313m from $567m.
A Uganda project "farmdown" payment boosted earnings a year earlier and this was only partly offset by lower exploration writedowns in the 2013 half, the company said.
The company also confirmed it is to seek a "development carry" from any future partner in its Ten project in Ghana under which the new investor would pay development costs.
It put the increased cost of developing Ten at $4.9 billion, excluding lease costs for floating production, storage and offloading (FPSO) vessels.
Tullow said its production for the six months to the end of June rose by 14% to 88,600 boepd, while revenue increased by 15% to $1.3 billion. It said its operating cash flow, before working capital movements, exceeded $1 billion for the first half.
A total of 13 exploration wells and 14 appraisal wells have been drilled so far this year with a 63% overall success ratio, the company said.
Tullow has had some disappointing exploration results recently but analysts said the result was ahead of expectations and that the opening of a new province in East Africa and signs of capital discipline "should address investor concerns and help to drive the shares up".
"Tullow continued to perform well in the first half of 2013. Our exploration-led growth strategy delivered major successes in Kenya and Ethiopia, further enhancing East Africa as a new oil region,'' commented the company's chief executive Aidan Heavey.
He said that Tullow has a considerable pipeline of development activity, including reviewing potential development options for the over 300 million barrels of oil discovered onshore Kenya, the farm down of its interest in the TEN project in Ghana and reaching the final stages of agreeing the key components of the Lake Albert Basin development in Uganda.
''Our business has a very firm financial foundation with strong production and revenue growth and significant annual operating cash flow. I am very confident we are well placed for future growth and value creation,'' he concluded.
