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Tullow upbeat on commercial viability of Guyana oil discovery

Highlights

Jethro-1 holds over 100 mil recoverable barrels

Appraisal program planned for 2020

Guyana emerging as new exploration hotspot

London — Independent explorer Tullow Oil has made a significant oil discovery in its block in Guyana, which could hold over 100 million recoverable barrels, it said Monday.

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The company is "confident of the commercial value" of this prospect as a standalone development, Tullow CEO Paul McDade told S&P Global Platts.

McDade said Tullow will undertake an appraisal program for this block next year to confirm the project's commercial viability.

"The results at Jethro-1 exceed our expectations with more than 100 million barrels of oil in a prospect with commercial and fiscal terms," Tullow CEO Paul McDade said.

Tullow said the Jethro-1 exploration well, drilled on the Orinduik license offshore Guyana, encountered 55 meters of net oil pay.

McDade said the company had spent the last few years resetting its exploration portfolio. After the successful results ofJethro-1, it will wait to see the results of its drilling campaigns for two other wells, along with the Jethro-1 appraisal program in 2020, and then draw up development plans.

Gil Holzman, CEO of Eco Atlantic -- one of Tullow's partners on the block -- said the discovery significantly "de-risks" the license and gives the companies a better understanding of the geology of the acreage.

Eco Atlantic is optimistic that the prospect could already be a standalone commercial development, Holzman told Platts.

He said that next year all the companies will "go back to the drawing table" and conduct a "simple appraisal program" to determine the next steps.

Related story: Tullow agrees first export sale of Kenyan crude at $60/b

MORE DRILLING

Guyana has become one of the world's hottest exploration plays after ExxonMobil made a string of large finds in the adjacent Stabroek block off the Latin American country's coastline.

ExxonMobil estimates the Stabroek block holds more than 5 billion barrels of oil equivalent, most of it oil.

Tullow estimates that its three wells in Guyana hold a total prospective resource of around 400 million barrels of oil.

Tullow will drill the Joe-1 well in the Orinduik block later this month with results expected by end-September, Ian Cloke, Executive Vice President, New Ventures, told Platts.

Tullow will also spud a well in Carapa in the adjacent Kanuku block at the end of September with results expected in Q4.

The 1,800 sq km Orinduik block is located in the shallow waters of the prospective Guyana-Suriname Basin.

The Orinduik block offshore Guyana could hold almost 3 billion barrels of oil equivalent of recoverable oil and gas, raising the stakes for closely watched wildcat drilling planned for later this year.

Tullow is the operator of the Orinduik block with a 60% stake. Total holds 25% with the remaining 15% held by Eco Atlantic.

Last week, Qatar Petroleum said it agreed a deal with Total to buy 40% of Total's 25% participating interest in the Orinduik block, and 40% of Total's 25% participating interest in the neighboring Kanuku license.

-- Eklavya Gupte, eklavya.gupte@spglobal.com

-- Edited by James Burgess, james.burgess@spglobal.com