Tullow Oil has announced that its exploration well, called Carapa-1, off the shore of Guyana in South America, has struck oil.

Preliminary results of drilling, wireline logging, pressure testing and sampling of reservoir fluid indicate the discovery of oil in Upper Cretaceous age sandstone reservoirs. 

Rig site testing has indicated that the oil is 27 degrees API with a sulphur content of less than 1%. A detailed laboratory analysis of the oil quality will follow in due course.

Mark MacFarlane, Chief Operating Officer, said the result is an important exploration outcome with positive implications for both the Kanuku and Orinduik blocks. "While net pay and reservoir development at this location are below our pre-drill estimates, we are encouraged to find good quality oil which proves the extension of the prolific Cretaceous play into our acreage. We will now integrate the results of the three exploration wells drilled in these adjacent licences into our Guyana and Suriname geological and geophysical models before deciding the future work programme."  

The Rowan EXL II jack-up rig drilled the Carapa-1 well to a total depth of 3,290 metres in 68 metres of water and the well will now be plugged and abandoned. 

Repsol Exploración Guyana, S.A. is the operator of the Kanuku block with a 37.5% stake. Tullow Guyana B.V. also holds a 37.5% stake with Total E&P Guyana B.V. holding the remaining 25%. 

Tullow Oil shares plummeted more than 70% last month after it scrapped its dividend and its CEO stepped down. Shares plunged again today as much as 20% following underwhelming results of drilling.

"The results from the Carapa-1... are, in our view, a negative," Berenberg analysts wrote. They added that the four metres of net oil pay reported from the well was unlikely to be commercial.