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Kenya eyes first commercial oil production
Wednesday, February 13, 2013

Kenya will have her first commercial oil production after Tullow Oil Plc announced that tests on Twiga 1 well in Turkana showed it will produce 2,850 barrels of fuel per day.

Tullow, which has been under pressure to deliver some good drilling news after a disappointing trading update in January, said results from its Twiga South-1 well showed "the first potentially commercial flow rates achieved in Kenya."

Four flow tests were carried out on Twiga South-1 in January and early February and a fifth test is ongoing, Tullow said, predicting a total combined flow rate of over 2,850 barrels of oil per day for the well in western Kenya."That's better than the 500 barrels a day... they discussed as an expectation," said Macquarie analyst Mark Wilson. "They've pulled a rabbit out of the hat there on operational progress."

Energy Ministry Permanent Secretary Patrick Nyoike welcomed the development.

"There will be more focus on Kenya as a potential oil producing country," he said.

The London-listed company has operations in several African countries but investors see its Kenyan drilling as particularly important.

The tests also provide "real encouragement" for Ngamia, another Tullow prospect in Kenya's Rift Basin, the company said.

The Weatherford-804 rig that was drilling at Twiga South-1 will now move to Ngamia-1A to re-enter the well there and perform four flow tests.

Tullow said these tests are expected to deliver rates similar to Twiga South-1.

To temper expectations Tullow said it will require considerably more exploration and appraisal before the commercial threshold for the basin is achieved.

Another keenly-watched prospect in its Kenya-Ethiopia portfolio, the Paipai-1 well, encountered "difficult hole conditions" Tullow said. It hopes to draw some conclusions on it by the end of February.

Africa Oil is a partner at Twiga South-1 and Afren Plc is a partner at PaiPai.

Although one of the industry's best performing drillers of recent times, with a record 49 wells planned this year, Tullow had a mixed year in 2012.

On the production side, it reaffirmed January's guidance for 2013 at 86,000-92,000 barrels of oil equivalent per day.


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