Tullow Oil plans to drill three or more oil exploration wells in Guyana next year, chief executive Paul McDade said today after the firm's second oil discovery in the country.
Following the Jethro-1 discovery last month, Tullow announced that it had also hit oil at the Joe-1 well in the Orinduik block.
Tullow shares soared by over 7% this morning, also supported by a sharp rise in crude oil prices following a weekend attack on Saudi Arabia's production facilities.
Although the discovery was smaller than initially estimated, it offers Tullow and its partners better understanding of the block to decide on further exploration drilling and development of production, Paul McDade told Reuters.
"It is a balance between how much new exploration we do next year to build gross volume on the blocks versus how much appraisal we do to start to move ahead with the development of the block," he said.
"We'd be drilling around three wells or more next year, I'd be surprised if we didn't drill that many," he said, referring both to the Orinduik and the Kanuku blocks.
The Joe-1 well met 14 metres of net oil pay in high-quality oil bearing sandstone reservoirs of Upper Tertiary age.
Tullow is the operator of the Orinduik block with a 60% stake. France's Total holds 25% and Toronto-listed Eco Atlantic holding the remaining 15%.
"Another discovery in Guyana, although (it) has come in smaller than expected and is unlikely to be developed as a standalone," BMO Capital Markets said in a note.
"The Joe-1 discovery and its surrounding prospects represent another area of significant potential in the Orinduik Block and we are greatly looking forward to the next phase of the programme as we continue to unlock the multi-billion barrel potential of this acreage," commented Tullow's Exploration Director Angus McCoss.