…makes first discovery offshore Guyana at Jethro-1 well
…exceeds pre-drill estimates of 100 million barrels of recoverable resources

TULLOW Guyana B.V – a subsidiary of UK-based oil company Tullow Oil plc, has made its first oil discovery offshore Guyana at Jethro-1 well in the Orinduik Block. Though the data from the Jethro-1 discovery is currently being analyzed, the company’s spokesman, George Cazenove, on Monday, told Guyana Chronicle that it is likely that the well exceeds Tullow’s pre-drill estimates of 100 million barrels of recoverable resources.

In making the announcement on Monday, Tullow Oil explained that the Jethro-1 was drilled by the Stena Forth drillship to a total depth of 4,400m in approximately 1,350 metres of water. “Evaluation of logging data confirms that Jethro-1 is the first discovery on the Orinduik licence and comprises high quality oil bearing sandstone reservoirs of Lower Tertiary age. The well encountered 55m of net oil pay which supports a recoverable oil resource estimate which exceeds Tullow’s pre-drill forecast,” the company explained.
Tullow Oil Chief Executive Officer (CEO) Paul McDade said the discovery is as a result of the significant work done by the company and its subsidiary. “This substantial and high value oil discovery in Guyana is an outcome of the significant technical and commercial focus which has underpinned the reset of our exploration portfolio. It is an excellent start to our drilling campaign in the highly prolific Guyana oil province,” McDade said.

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According to the company, this new discovery significantly de-risks other Tertiary age prospects on the Orinduik licence.

Here in Guyana, Director of the Department of Energy, Dr. Mark Bynoe said the discovery in the Orinduik Block is another major development for the Co-operative Republic of Guyana (CRG). Like Tullow Oil, he believes that the discovery adds to the further de-risking of the deep and ultra-deep zone.

Dr. Bynoe noted, too, that the discovery offers significant potential for the diversification of Guyana’s hydrocarbon production base.

“The Department of Energy (DE) is encouraged by the prolific rate of discovery in the CRG and will continue to work assiduously and conscientiously to extract optimum value from these resources for all the peoples of our country,” he assured the nation.
Dr. Bynoe said the new discovery demonstrates the vastness of the country’s natural resources, and assured that all Guyanese stand to benefit significantly from the oil discoveries.

Tullow Oil’s spokesman told Guyana Chronicle that the results from the evaluation of the data from the Jethro-1 discovery would be released later in the year. “That (the evaluation) will take some time as we match up various data sets but we expect to be able to say more about Jethro over the remainder of the year,” Cazenove explained.

He said, however, even as the data from the Jethro-1 discovery is being analyzed, preparation is being made for the drilling of the Joe well also in the Orinduik Block. The non-operated Carapa-1 well is also expected to be drilled later this year on the adjacent Kanuku Block test the Cretaceous oil play.

“Joe will start drilling in the next week or so with a result expected in the second half of September. Carapa will start drilling in September with a result expected in the fourth quarter of the year,” Cazenove explained disclosed.

Overall, Tullow Oil has injected US$80M into the drilling of the three wells offshore Guyana.
With U.S oil giant ExxonMobil putting its gross recoverable resource estimate to more than six billion barrels of oil equivalent in the Stabroek Block, Cazenove said is cognizant of the country’s potential.

According to a Production Sharing Agreement (PSA) signed between the Government of Guyana, Tullow Guyana B.V and Eco (Atlantic) Guyana Inc, the country could benefit from as much as 60 per cent in oil profit, including a one per cent royalty once the explorations are successful and the companies start pumping for oil in the Orinduik Block.

However, with just one discovery in the Orinduik Block, Cazenove said it is too early for Tullow to disclose its projected year of production if findings continue to be favorable.
According to the Petroleum Contract, which was signed on January 14, 2016, once the recoverable costs have been satisfied, the profit will be shared between the government and the contractor for each field, based on an established system. This could see Guyana receiving a profit share as high as 60 per cent and as low as 50 per cent.

For the first 25,000 barrels of oil, Guyana is in line to receive a profit of 50 per cent. For the next 25,000 barrels, the country’s profit would increase to 52.5 per cent and 55 per cent for the next 15,000 barrels. For the subsequent batch of 15,000 barrels of oil, Guyana would benefit from a 57.5 per cent profit and 60 per cent profit for more than 80, 000 barrels of oil. The profit will be shared between the government and contractor on a monthly basis.

Article 15:06 of the Petroleum Agreement indicates that a one per cent royalty is included in the government’s share of profit. “The government’s share of profit oil specified in Article 11 includes royalty payable by the contractor at the rate of one per cent of crude oil produced and sold, and delivery to the minister, pursuant to Article 14 of his share of profit oil equivalent to royalty shall constitute payment of such royalty in kind,” the agreement states.

The agreement also provides for associated gas produced from an oil field within the contract area to be used for the purposes of the operations of production and production enhancement of oil fields, such as gas injection, gas lifting and power generation.
Tullow Oil is a leading independent oil and gas exploration and production company, which has interests in 90 exploration and production licences across 16 countries that are in West Africa, East Africa and ‘New Ventures’, which includes Guyana and French Guiana. In Guyana, Tullow Guyana B.V. is the operator of the Orinduik block with a 60 per cent stake. Total E&P Guyana B.V. holds 25 per cent with the remaining 15 per cent being held by Eco(Atlantic) Guyana Inc.