Exploration firm Tullow Oil has closed a farm-in agreement on a 50 per cent interest in Centric Energy's Block 10BA in north-western Kenya.

The deal brings to four the number of farm-in agreements that Tullow has closed this week after acquiring 50 percent states in another two Kenyan blocks and an Ethiopian exploration area.

Tullow paid $961,000 in historic costs and will finance 80 per cent of future expenditures to a limit of $30 million.

Kenya has yet to discover any commercial oil deposits, but interest in its exploration blocks has grown since neighbouring Uganda discovered billions of barrels in its Lake Albert rift, where Tullow is expected to start oil production next year.

"I cannot emphasise too strongly what an excellent deal this is - not only for Centric, but more importantly for Kenya," Centric's chief executive Alec Robinson said.

"Tullow brings their track record of exploration success in Uganda and environmental stewardship on Lake Albert. If there is oil to be found, they will find it. And personally I feel strongly that there is oil to be found in Block 10BA."

Tullow today said it is targeting about 1 billion barrels of resources in South America and West Africa.

It plans to explore for oil in Liberia, Sierra Leone, and Mauritania in Africa, and French Guiana and Guyana in South America, chief financial officer Ian Springett said. The Zaedyus prospect in French Guiana and Cobalt in Liberia are the "two big ones," he said.

The company also plans to continue exploration in Uganda, Ghana, Ivory Coast, and Tanzania and Kenya in East Africa.

"We now have an extensive exploration campaign where we are looking to open new basins where we see exciting prospects," Mr Springett said. "A number of these wells are targeting very substantial resources."

Tullow plans to invest at least $500 million to drill about 40 exploration and appraisal wells this year, he said. The company will increase production 58 per cent to as much as 92,000 barrels of oil equivalent a day this year after starting output at the Jubilee field in Ghana in November.

The new forecast "is a little bit lower" than the previous guidance of 95,000 barrels a day, partly because the ramp-up of output from Jubilee is likely to take up to six months, Mr Springett said. The field is currently pumping 50,000 barrels of oil a day and will reach 120,000 barrels later this year.

Tullow said a general election planned on February 18th in Uganda may delay the start of a venture with China National Offshore Oil Corp and Total SA to tap fields in the Lake Albert basin. The partners are progressing talks with Uganda on the development, which may pump more than 200,000 barrels of oil a day in 2015.

"The new partnership of Tullow, Cnooc and Total remains fully committed and looks forward to commencing the basin-wide development this year," chief executive Aidan Heavey said.

Tullow paid about $1.5 billion in July to Heritage Oil for interests in Block 1 and 3A in the Lake Albert basin. Uganda has delayed final approval of the deal amid a tax dispute, an issue that needs to be resolved before Cnooc and Total can be brought in as partners.

There is "some minor delay" in the Kasamene and Nzizi development projects, which are now scheduled to pump first oil and gas in 2012, Springett said. "We are close to resolution" with the Ugandan government.

Tullow plans to increase capital spending to about $1.5 billion in 2011 from $1.2 billion last year.

Exploration write-offs for 2010 are expected to be $135 million, the explorer said. "This write-off is principally associated with unsuccessful 2010 exploration activities in Gabon, Tanzania, Ghana, new ventures activity and license relinquishments," the company said.

Bloomberg/Reuters