Tullow Oil hit by fresh exploration setback

Tullow Oil, the independent oil exploration group, yesterday disappointed investors for the second time in as many months by reporting the failure of another test well.

Tullow Oil, the independent oil exploration group, yesterday disappointed investors for the second time in as many months by reporting the failure of another test well.

The Dublin-based and London-listed company said it had plugged an exploration well offshore of Gabon in West Africa after failing to find significant quantities of oil.

Shares in Tullow slid almost 7 per cent to 93.25p, making it one of the biggest fallers in the FTSE 250 index. The disappointing news from Gabon followed the abandonment last month of a well in Bangladesh.

Aidan Heavey, the chief executive of Tullow, said he remained confident, however, that the company's Gabon licence would yield a number of prospects. He also disclosed that the Angolan national oil company Sonogal had decided to join in its Gabon licence, a move which could result in Tullow becoming involved in the Angolan oil industry.

In a separate development, Tullow said it had agreed to pay £14.3m for ChevronTexaco's 50 per cent interest in the Orwell gas field in the North Sea. The deal thwarts Centrica's hopes of gaining an interest in the field, which is linked to the Thames platform system.

Centrica agreed in January to buy ChevronTexaco's stake in Orwell, which is estimated to have reserves of 30 billion cubic feet of gas. Tullow also announced two smaller deals to acquire ExxonMobil's interests in the Blythe and Fizzy fields in the southern North Sea.

These two latest deals consolidate Tullow's position in the area at a time when the decline in UK gas reserves is forcing up prices. Tullow is already the operator of the Bacton plant where much of the gas from the southern North Sea is landed.

Tullow is drilling several other exploration wells in Bangladesh, the North Sea and West Africa, the results of which are expected over the next few months.