Tullow strikes oil offshore Guyana

…share prices, interest in Guyana jumps

By Jarryl Bryan

United Kingdom-based oil company Tullow has announced the discovery of oil in commercial quantities at the Jethro-1 exploration well in the Orinduik Block, becoming the second oil company to announce an oil find offshore Guyana.
This is the first discovery in the Orinduik Block, which is located in close proximity to the Stabroek Block – where United States oil giant ExxonMobil has already made 13 lucrative oil discoveries.

Tullow Head of Communications,

George Cazenove

It is understood that the Jethro-1 well was drilled by the Stena Forth drillship to a total depth of 4400 metres in approximately 1350 metres of water. According to a statement from the company, evaluation of the logging data confirmed that Jethro-1 comprises high-quality oil-bearing sandstone reservoirs of Lower Tertiary age, which simply means they date back to millions of years ago.
According to the statement, the well encountered 55m of net oil pay, which indicates a recoverable oil resource estimate that exceeds Tullow’s pre-drill forecast of 100 million barrels of oil.

Tullow CEO Paul McDade

Shares jumped
News of the find created waves in financial centres around the world, as well as international news outlets. Up to press time, Tullow’s shares had jumped by over 19 per cent on the London Stock Exchange. In fact, it was the biggest gainer on the index.
In the company’s press release, Tullow’s Chief Executive Officer, Paul McDade, was quoted as praising the oil discovery as a great start to their drilling campaign in Guyana. He noted the significant technical work that went into their exploration activities.
“This substantial and high-value oil discovery in Guyana is an outcome of the significant technical and commercial focus which has underpinned the reset of our exploration portfolio. It is an excellent start to our drilling campaign in the highly prolific Guyana oil province.”
“We look forward to drilling both the Joe and Carapa prospects in our 2019 drilling campaign and the material follow-up exploration potential in both the Orinduik and Kanuku licenses,” McDade was quoted as saying in the release.

Exploration licence
Meanwhile, Tullow’s Head of Communications, George Cazenove explained in an interview with this publication that while Tullow currently has an exploration licence, the company first needs to fully determine the potential commerciality of the block and put plans in place before they seek a production licence.
“After one exploration well, we are some way from that despite the success we have had. The focus, for now, remains exploration with the Joe well [Orinduik] and Carapa well [Kanuku] coming up and we will do more exploration in 2020.”

Major development
In a statement on Monday, Director of the Department of Energy, Dr Mark Bynoe said that the discovery was a major development for the country as it adds to the further de-risking of the deep and ultra-deep zone.

London Stock Exchange showing how Tullow’s share price jumped on the heels of their oil find

“The Department of Energy is encouraged by the prolific rate of discovery in the CRG and will continue to work assiduously and conscientiously to extract optimum value from these resources for all the peoples of our country,” Bynoe said.
He noted that it also offers significant potential for the diversification of Guyana’s hydrocarbon production base. With this significant find, it is expected that Tullow will now evaluate the data from the Jethro-1 discovery and consequentially carry out an appraisal.

Other projects
It is understood that the UK-based company also has plans to drill two more wells offshore Guyana. These plans include the Joe prospect in the Orinduik Block, while the Carapa 1 will be drilled later this year on the adjacent Kanuku Block.
The Joe is located in approximately 650 metres of water and costs approximately US$3 million to drill. A recently published report from international company Gustavson Associates had estimated that the well has a 43.2 per cent chance of success.
The Orinduik oil block is just a few kilometres from Exxon’s discoveries in the Liza and Payara fields. It is under the administration of Eco Guyana and Tullow, who signed a 10-year Petroleum Prospecting licence and Production Sharing Agreement with Guyana in 2016. French firm Total E&P Activities Petrolieres entered the fray in 2017, partnering with Eco with the option to get a 25 per cent share in the block.
Tullow had announced since February that it was bringing forward its drilling programme from the previously scheduled end of the year to the second quarter. It had announced that the Jethro prospect would be drilled in June.
On the other hand, it was announced that its Carapa prospect in Kanuku would be drilled in the third quarter of 2019. It is understood that the net cost of the Jethro well is US$30 million, while the Carapa well will cost US$20 million.
Tullow Guyana BV is the operator of the Orinduik Block, with a 60 per cent stake. Total E&P Guyana BV holds 25 per cent with the remaining 15 per cent being held by Eco (Atlantic) Guyana Inc.
This configuration can all change, however, as it was recently announced that Qatar’s state oil company is looking to enter into Guyana’s oil market with a farm-in deal through Total that could see them obtaining stakes in both the Orinduik and Kanuku Blocks.