News from Tullow Oil that they have completed the purchase of the stakes Heritage Oil held in two shared licence areas in Uganda has been well received by the market.  This is part of a two-stage plan to develop the potential of the acreage in the licences held by Tullow.  This news was quickly followed by a positive announcement on the results from the Ngiri-2 appraisal well, 1.7km north or the original discovery, where oil was also found.  Further test drilling is underway to assess the full potential of the find.

We expect announcements on stage 2 of Tullow’s development of its Ugandan operations in the next few months.  This should see stakes in their licences sold to China’s CNOOC and to Total of France.  We believe that with the on-going discoveries and these industry experts on board, the potential output is materially over and above market forecasts.

Ghana has also provided good news fro Tullow with the results from the Owo-1 well, which found high quality light oil and the company believe the discovery could be as big as the Jubilee field, which has been a key driver of Tullow’s the share price in recent years.

I have a large position in Tullow in the F&C UK Equity Fund in advance of what I believe will be on-going positive newsflow over the coming months from their operations in Uganda, Ghana, West Africa and South America.

This further underpins our approach to the oil sector where for some considerable time we have avoided ‘big’ oil in favour of the growth potential of the exploration and production companies further down the market cap scale.