More Oil Discovered in Uganda

By Eddyson Lugangwa Posted 16 October 2006 @ 09:41 am EET     Print     Reprint     E-Mail     Comments

Kampala (Reuters) - Tullow oil and Heritage Oil, partners in exploration area 3A, expect up to 500 million barrels of oil at the Kingfisher well in Hoima, Uganda. “Based on the success of the well to date, Tullow oil and its partner Heritage Oil, hope to find up to 500 million barrels of oil,” Tom Hickey, Tullow’s chief financial officer, said.

The company announced that the joint venture had found oil and gas after drilling just 2 000m of the projected 4 000m. “Discovery of oil and gas at this point justifies the group’s decision to target Uganda, which has been relatively unexplored. Hickey stressed that the positive signs would have no direct bearing on what the group may encounter at 4 000m. “But based on the current indications, Tullow and Heritage are hoping to discover a well containing up to 500 million barrels of oil,” Hickey said.

He said if the well delivers the expected amount, this would double Tullow’s total oil reserves overnight and add significantly to its revenue stream and earning potential in the years ahead. The group’s shares have already shot up by 4.8 percent after the find. The joint venture would carry out tests to establish whether the oil could flow out of the ground, its quality and quantity.

This would start within a month at four levels. It was scheduled to take up to three weeks. Meanwhile, Hardman resources, which was exploring block 2 with Tullow, released said on Wednesday that they had signed a memorandum of understanding with the Ugandan government, relating to the investment plans for exploration area 2, where they recently found huge volumes of commercially exploitable oil.

The memorandum includes commitments by the joint venture partners and the government to advance appraisal and development activities to realise the full potential of discoveries on block 2 and provide time to explore the rest of the block. According to the statement signed by Simon Potter, the chief executive officer, the next oil well to be explored in November would be Nzizi, to the south of Mputa-1.

The joint venture would also undertake further studies to ascertain the volume of the existing discoveries as well as explore the northern area of the block to identify prospects for drilling in 2007 and 2008. They would also evaluate the most effective manner to drill offshore prospects around Lake Albert by the end of 2007.