London-based Tullow Oil Plc announced the discovery of up to 600 million barrels of high-quality oil at a block in Ghana owned with Anadarko Petroleum Corp sending Tullow shares up over 10 percent.
Tullow also said in a statement on Monday the structure it successfully drilled in the West Cape Three Points Block extended into an adjacent exploration block, which Tullow also co-owns with Texas-based Anadarko, suggesting further potential upside for the partners.
Tullow's exploration boss, Angus McCoss, told a conference call the company had been targeting recoverable reserves of only 250 million barrels at the West Cape Three Points Block but now hoped for 600 million.
Industry sources said that, based on the drilling data, the block was likely to contain at least 300 million to 400 million barrels. Tullow shares were up 9.9 percent at 449-1/2 pence at 0929 GMT, compared to a 0.04 percent dip in the DJ Stoxx European oil and gas sector index.
KBC Peel Hunt raised Tullow to "hold" from "reduce". "The discovery of oil in the Mahogany well represents a major event for the Republic of Ghana and for Tullow," Chief Executive Aidan Heavey said in the statement.
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