Bloomberg News

Afren Sees More Companies Entering Kenya After Tullow’s Find

March 27, 2012

Afren Plc (AFR), a U.K. explorer focused on Africa and the Middle East, said Tullow Oil Plc (TLW)’s discovery in Kenya will spur the arrival of international oil companies in the East African nation.

Tullow made its first oil find in Kenya with its Ngamia-1 well and said today it expects to find more crude with continued drilling. That discovery “de-risks” further exploration in the region and will prompt companies such as Exxon Mobil Corp. (XOM), Royal Dutch Shell Plc (RDSA), Total SA (FP) and Eni SpA (ENI) to assess expansion in Kenya, said Afren Chief Executive Officer Osman Shahenshah.

“It is extremely helpful, we are next door in Block 10A operated by Tullow” to be drilled later this year, Shahenshah said in an interview. “A few years ago when we went into East Africa people thought that we are crazy and it’s turning out to be a very successful province for a number of companies.”

Exploration companies such as Tullow, Anadarko Petroleum Corp. (APC) and Ophir Energy Plc have ventured into East Africa, starting a “gold rush,” as Simon Lockett, the CEO of Premier Oil Plc (PMO), which has interests in the region, described it.

BG Group Plc (BG/) and Eni yesterday announced more natural-gas discoveries off Tanzania and Mozambique, bolstering the area’s status as one of the world’s largest resource holders.

‘Massive Upside’

Tullow plans to start drilling the Paipai-1 well at Block 10A in the second quarter, where resources “could be in excess of a couple of 100 million barrels of oil equivalent,” Angus McCoss, the company’s exploration director, said Jan. 18.

Separately, Afren said today it plans to pump 100,000 barrels of oil equivalent a day in 2017, up from the 42,000 to 46,000 barrels a day expected this year. It will invest from $450 million to $500 million in projects this year, mostly funded by the company’s cash flow.

“We’ve got a billion barrels of reserves and resources and 3.5 billion of perspective resources,” Shahenshah said today by phone. “There is a massive upside already within the company,” and the production target is “easily achievable.”

Afren rose 3.4 percent to 135.5 pence by the London close.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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