UPDATE 2-Tullow Oil pins hopes on Kenya to sway doubters

Wed Jan 15, 2014 8:22am EST
 
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* Kenya basin could hold more than 1 billion barrels

* Tullow starts studies on plans to develop oil facilities

* Firm sees 2014 output at 79,000-85,000 boped (84,200 in 2013)

* Shares slip, analysts say Tullow must regain reputation

By Sarah Young

LONDON, Jan 15 (Reuters) - Britain's Tullow Oil is pinning its hopes on two new discoveries in northern Kenya to turn the region into a significant crude producer and regain its reputation as a successful explorer.

The group, whose main operations are in Africa but which also has exploration licences from Uruguay to Greenland, doubled its estimate on Wednesday of its discovery in Kenya's South Lokichar basin to 600 million barrels following the two successful well results.

Tullow made its name over the past decade opening new oil areas in Ghana and Uganda, but after a string of disappointing drilling results it lost a quarter of its value in 2013 and was the worst-performing stock in the FTSE 100 outside the mining sector.

The basin, one of eight in Kenya to which Tullow has exposure, had the potential to hold over one billion barrels, the company said. That compares with Uganda's estimated 3.5 billion barrels of reserves, which when production starts could turn Kenya's neighbour into a top 50 oil producer.   Continued...