West Africa Oil Basin Discovery

Anadarko Corp.’s (APC) second oil discovery offshore Sierra Leone further demonstrates that a new stretch of the West African coast has the potential to become a productive oil basin, the company and its partners said Monday.

“The Mercury well demonstrates that the stratigraphic trapping systems we’ve identified are working, and that the petroleum system is generating high-quality oil,” said Anadarko’s Senior Vice President for Worldwide Exploration Bob Daniels. “These results continue to build momentum in the basin and enhance our confidence.”

“This is a large oil play with significant potential for future offshore exploration in West Africa,” said a spokesman for Repsol YPF (REP), one of Anadarko’s partners in the well.

Andarko and its partners in the Mercury well, Repsol and Tullow Oil PLC (TLW.LN), are following a trail of geological structures called stratigraphic traps offshore Ghana, the Ivory Coast, Liberia and Sierra Leone. Tullow says there are numerous undrilled prospects in this region that could be of similar size to its 1.5 billion barrel Jubilee field offshore Ghana.

It isn’t clear from these results whether Mercury is a commercial discovery, said Evolution Securities analyst Richard Griffith. “However, the basin implications mean that the sentiment impact on the shares today could be higher,” than would normally follow from a discovery like this, he said.