Tullow shares up as it nears 'commercial threshold'

Tullow Oil's share price hit a two-month high today after it reported positive results from its drilling operations in Africa.

Tullow said drilling results from its Buffalo-1 well which is located in the Lake Albert Rift Basin in Uganda had encountered "15 metres of net gas pay and over 28 metres of net oil pay", which could make it the largest and gas discovery in the Butiaba region.

The news sent Tullow shares up 7.5 per cent in Dublin to €6.90, a gain of 50 cent. In London, the Irish company made similar gains adding 8.7 per cent or 49 pence to 621 pence.

Tullow shares have risen 33 per cent in the past month.

In a statement Aidan Heavey chief executive the company was now almost certain to reach the commercial threshold for development in the basin.

According to this plan Tullow needs to find 400 million barrels of oil reserves at a price of about $80 a barrel, or 500 million barrels at $60 a barrel, to start production. The plan includes the building of a pipeline through Kenya to the Indian Ocean.

Davy Stockbrokers' analyst Job Langbroek said in a research note that the "crucial outcome is that the commerciality threshold for the basin has almost certainly been reached".