Tullow Oil is the biggest faller in a weak FTSE 100 following a mixed picture from its latest drilling update.
The company said its Jupiter-1 exploration well offshore Sierra Leone had struck oil but found no oil-water contact, which meant the area would need further evaluation. Analyst Will Arnstein at FinnCap said:
Based on the limited information available our initial impression is that the discovery is of limited commercial value and will require further appraisal.
Rob Munday at Liberum Capital was also underwhelmed by the news:
The Jupiter discovery offers some encouragement but does not yet appear economic on a stand-alone basis. We retain our hold recommendation and £14.25.
Andrew Matharu at Westhouse Securities was more upbeat, however:
The absence of an oil-water contact at total depth implies that the reservoir drive system is yet to be determined although it may be encountered at a greater depth, and pressure data gathered as part of the logging programme will yield important information about the pressure gradients within the reservoir system. These are early days for Sierra Leone's oil industry but another discovery in the Cretaceous sequence is very positive and also has read‐across implications for the future potential of Liberia.
Tullow is currently 65p lower at £15.36.
