Waraga-1 is owned jointly with Hardman, the operator for the well. Hardman said the well flowed oil to surface and a stabilised rate has been established. Initial results show an encouraging flow rate of around 1,500 barrels of oil per day.
There are three zones to be tested at Waraga-1. The results today relate to the lower zone, on which further testing is to carried out over the next 48 hours. The entire test programme for the three zones will take around 14 days and Tullow intends to provide its next update on the project on Tuesday 27 June.
Today's announcement is the second bit of good news from Tullow this month. Last week its shares rose after it announced a significant gas discovery in the North Sea, via the K4 exploration well, in which it has a 22.5% stake. At the same though, as if to remind investors of the hit and miss nature of much oil and gas exploration, it also announced that a well in Equatorial Guinea had come up dry.
Today's news on Waraga-1 pleased analysts at Davy, which said that subject to the additional tests still underway over the next two days, the results so far are 'uniformly positive'. It added: 'The rate of flow demonstrates that (at least initially) there is good reservoir energy and suggests that if the other two zones flow, the well will have a good overall yield.'
Tullow's interests are spread across 90 exploration and production licences in 15 countries, with focus on three core areas: NW Europe, Africa and South Asia.
Its NW Europe interests are primarily focused on gas in the UK Southern North Sea. It operates over 60% of its production.
In Africa, it has exploration and production projects in Gabon, Cote d'Ivoire, Congo and Equatorial Guinea, as well as a large gas field development and appraisal programme in Namibia and, of course, operations in Uganda.
In South Asia, it has exploration and production interests in Pakistan and Bangladesh and high impact exploration activities in India.
In its AGM statement last month, it reiterated its confidence about the outlook for the current year, saying performance for the 2006 year to date has 'encouraging'.
It achieved record profits in 2005 on the back of high oil and gas prices and acquisitions, with pretax profit leaping 282% to £178.6m on turnover ahead 98% to £445m.
Up until the start of big pullback on markets on 10 May, Tullow shares had put on a sparkling performance, having trended higher all the way through from the beginning of the 2005 calendar year and putting on more than 180%.
The May pullback however hurt Tullow badly, in line with the rest of the oil and gas sector. Having hit an all-time high of 440p on 8 May, the shares promptly slumped by more than 20%.
The group however looks to be on a bit of a roll with its exploration programme at the moment and success on this front, coupled with the still buoyant outlook for oil and gas prices, has inevitably led to the shares making up for some of the lost ground in recent weeks.
Today's news helped them put on a further 17.75p or 5.3% to 352.25p by mid afternoon, leaving them trading on a forward multiple of 13.3. The prospective yield is 1.2%.
