November 26, 2012 / 9:03 AM / 5 years ago

UPDATE 1-Tullow confirms oil discovery at Kenya drill

* Says 30 metres of net oil pay found at Twiga South-1

* Drill confirms potential

* 800 metres gross oil found deeper in well; more testing needed

LONDON, Nov 26 (Reuters) - Tullow Oil Plc confirmed on Monday that its Twiga South-1 well in Kenya had discovered oil, raising prospects that the region holds a significant reservoir.

The British explorer said it had found 30 metres of net oil pay at the well, its second at the Lokichar Basin, onshore Kenya.

The oil was of a similar quality to that found at the first Ngamia well about 22km away, it said. Tullow found 100 metres in more shallow sections at Ngamia, which was drilled closer to the basin fault.

“This immediate follow on discovery reaffirms the considerable prospectivity of the Lokichar Basin,” said exploration director Angus McCoss in a statement.

Tullow said it had also found about 800 metres of gross oil pay deeper in the rock, a potential new play that would need further evaluation to understand how large it was and whether it was productive.

The commercial viability of the Lokichar finds is yet to be ascertained, but hopes are rising that Kenya could become a petroleum producer and exporter.

The east African country has recently become a hotbed of exploration, with neighbouring Tanzania and Uganda also striking commercially viable quantities of hydrocarbons.

The 30 metres discovered at Twiga-1 was in-line with pre-drill estimates, said broker Morgan Stanley.

“The well results to date reaffirm the basin’s multi billion barrel size and support our belief of the region’s transformational potential,” Morgan Stanley said.

Tullow has a 50 percent operating interest in the Twiga well, with Canada’s Africa Oil holding the other 50 percent.

Shares in Tullow were down 1 percent to 1,378 pence at 0837 GMT, slightly underperforming the FTSE100, down 0.1 percent.

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