Shares in Tullow Oil gain 3.5 percent, making the UK-based oil explorer the top gainer in the FTSE 100 as it and U.S. producer Anadarko Petroleum make new discoveries around their Jubilee field in Ghana.
Tullow said in a statement its Mahogany-3 appraisal well in the West Cape Three Points licence had encountered a significant find beneath the Jubilee field and also showed the field extended much further to the southeast than earlier thought.
Citigroup says while the full impact of today’s news is still to be fully evaluated by Tullow, preliminary analysis given by the company points to a 20 percent increase in previously disclosed reserve estimates.
The broker says while it still has doubts as to the commercial viability of the Jubilee phase-1 development, with oil at $40 a barrel, it believes this newsflow will be taken positively by the market which could value the news at around 30 pence a share.
Citigroup repeats its “hold” rating on Tullow shares.