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Tullow mulls options at Guyana discovery

Operator turns attention to appraisal and development of oil find at Jethro as next wildcat lined up

Tullow Oil is already considering the potential for a standalone development at its Jethro oil discovery off Guyana, where it is lining up an appraisal and well test next year.

The Anglo-Irish independent has a “high degree of confidence” that the discovery on its Orinduik block is commercial, but it has yet to locate the oil-water contact.

Tullow revealed on Monday that the Jethro-1 well, which was drilled with the Stena Drilling drillship Stena Forth, came up trumps, hitting 55 metres of net oil pay in a high-quality Lower Tertiary reservoir.

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Ian Cloke, Tullow’s executive vice president of new ventures, said the 55 net metres was in a 58-metre interval, meaning over 90% of net-to-gross, adding: “This is very good rock.”

“It is one single sand body – probably made up of a number of channel lobes, but it is one single sand body,” Cloke said on a call following the discovery announcement.

Multiple oil samples have been taken and are not off to the lab for testing, Cloke said: “We are really pleased with the way the reservoir is flowing.”

Although Tullow has not put a size estimate on the discovery, it is above its pre-drill estimate, which was a conservative 100 million barrels-plus.

Chief executive Paul McDade said on the call: “As you would expect in a frontier area, the terms are favourable. So, given the water depths that we are in and the types of developments one would expect, we anticipate that these barrels should be high value.”

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McDade added; “Whilst we need to move forward and appraise Jethro, I think we have a relatively high degree of confidence at the moment that we have something already that can be commercial.

"Let’s see how the appraisal goes, but we are feeling pretty good from a commerciality and development point of view already, even just with one well.”

Cloke said: “At the moment what we are seeing is Jethro as a standalone commercial development, potentially. What we will do is we will take the result and integrate it with the seismic over Jethro channel and look at it when we get the Joe result.”

Joe is the next well up on the block, with the Stena rig set to soon move the short distance to the drilling location. Joe is an Upper Tertiary target and a shallower well, with results seen in late September.

Although the Jethro well has de-risked Joe somewhat, Cloke pointed out that it is an independent target.

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“We need to process the seismic, calibrate it… In terms of the Upper Tertiary and Joe, that prospect is similar but it is in a different part of the block – the western part. The AVO characteristics from Jethro can be used to give us further confidence in Joe, and there are other prospects around Joe.”

Cloke said the Jethro appraisal programme will deliberately be minimal.

“The appraisal programme will be looking to pin down the oil-water contact, which we haven’t penetrated in the well… It looks to be a little deeper, but it is uncertain. We need to process the seismic and then we will be coming back for an appraisal well and test.”

While Tullow is set to spud Joe this month, on the adjacent Kanuku block where it is a partner, operator Repsol will spud the shallow-water Carapa-1 wildcat in September. This is a Cretaceous analogue to ExxonMobil’s Liza discovery on Stabroek.

The Jethro result does not have any impact on Carapa.

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Apart from the Jethro appraisal, Tullow will carry out exploration well on Orinduik next year. Other prospects seen at Orinduik are Amatuk, Rappu, Tuktuk, Drios, Blacktip, Mako and Iatuk.

“We will certainly be sitting back and thinking about the programme for 2020 and the potential for development,” McDade said, adding: “We will continue to be disciplined about our capital allocation in the coming years.”

Tullow operates the Orinduik block with a 60% interest and its partners are French player Total and Eco, with 25% and 15% interests, respectively.

However, Qatar Petroleum has recently agreed to take 10% in both Orinduik and Kanuku from Total.

Shares in Tullow shot up around 18% in London on Monday following news of the Jethro discovery.

Fellow London-listed partner Eco's shares were up around 97% by 10am.

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