Tullow expects new oil discovery in Kerio Valley aerial survey

Workers at a Tullow oil rig in Turkana: The firm expects an airborne survey in the Kerio Valley basin to confirm oil finds. PHOTO | FILE 

By OTIATO GUGUYU, dotiato@ke.nationmedia.com

British exploration firm Tullow Oil says it expects an airborne survey in the Kerio Valley basin to confirm oil finds outside its South Lokichar blocks.

The result from the basin opening Cheptuket-1 well  in the Kerio Valley’s Basin in Block  12A was announced  in  March 2016 which showed that the company  encountered  good  oil  shows across  an interval  of  more than 700  metres.

The post-well analysis is still in progress and Tullow has begun conducting a Full Tensor Gravity Gradiometry (FTG).

“An FTG  survey  over  Block  12A  commenced  earlier  this month  to  gain  further  data  on  this  prospective  area. Further exploration activities in Block 12A  and Tullow’s other remaining unexplored Kenyan acreage, continue to be evaluated,” the company said in a half-year results announcement made Wednesday.

Tullow says ongoing evaluation of its South Lokichar Basin in the first half of 2016 led to an upgrade of the find up to 750 million barrels of oil (mmbo).

The company is bullish on its findings at the South Lokichar Basin, saying its potential may increase the resource estimate to around one billion barrels of oil.

Tullow has not yet started producing oil in Kenya although it intends to launch the Early Oil Pilot Scheme to produce a gross of 2,000 barrels of oil per day when the pilot scheme commences mid next year.

The company says it is continuing to put money in exploration and appraisal campaign, which is set to re-commence in the fourth quarter of 2016.

READ: Tullow finds oil traces in Kerio Valley Basin

According to the half year report, the firm’s capital  expenditure for the six months to June amounted to $589million (net  of  Norwegian  tax) with $561  million invested  in development and $28 million in exploration and appraisal.

“More than 85 per cent of the total was invested in Kenya, Ghana and Uganda and 94 per cent was invested in Africa,” the report read.

The oil explorer is, however, expecting the West African TEN Project to deliver 90,000 barrels of oil per day by next month — its first delivery oil since the company started the project three years ago.

The firm has, however, made a profit after tax of $30 million in the first half 2016 although it earned lower revenues on prior year as a result of lower commodity prices and reduced Jubilee production.

The oil explorer noted that the low performance was partially offset by significantly lower costs and write-offs.

Tullow expects to make estimations of the technical requirements as well as rough investment cost for the project for both the upstream and pipeline early next year.