Shares in Tullow Oil plunged to two-year highs Wednesday after a London listing researcher warned that two major discoveries in Guyana's waters contain heavy oil, prompting warnings that projects would be difficult to commercialize.
Shares of the company fell 23 percent to 159.3 pp. – the lowest since September 2017 – until mid-morning, after announcing the results of the oil quality analysis in the "Ethetro & O" discoveries off the South American coast.
The oils recovered from both wells were heavy raw materials with high sulfur content, Talou said. Such varieties are usually more expensive to extract and transport. Lighting up the rewards of refineries, sweet pears and great variety also tends to trade at a discount.
The FTSE 250 company said on Wednesday that it and its partners are evaluating "the commercial viability of these findings" in light of the analysis.
Its partners include French Total, which holds a 25% stake in the Guyana and Eco Atlantic discoveries, whose shares are listed in the UK and Canada and owns 15%. The remaining 60 percent is held by Tallow.
Shares in London's Eco Atlantic were down 51 percent to 65p by mid-morning, though they tried to achieve a more optimistic tone, saying the quality of Guyana's oil was not "different" with similar heavy lumps produced commercially in other regions like the North. Sea and Gulf of Mexico.
It says the partners have sought advice from third-party consultants with expertise in developing such varieties of oil.
"The company remains optimistic about considering development scenarios and as the project progresses, it will define further information on plans and timing," Eco Atlantic added in a statement.
JPPorgan analysts Kazenov note that the quality of the oil "risks the commerciality of both prospects despite the excellent quality of the tank".
Al Stanton, an analyst at RBC Capital Markets, said he expects investors to now be "more cautious" on the Tallow Stock Exchange, which received significant boost in August when the first discovery was announced in Guyana.
Tolou recently suffered another setback when a $ 900m deal to sell a significant stake in an undeveloped Uganda project collapsed following a tax dispute with the East African government.
The company also revised its forecast for year-round production for the third time on Wednesday. Production is expected to average 87,000 barrels of oil per day, down from previous revised management of 89,000-93,000 b / day, due to lower than expected production in Ghana, which has two key projects, Jubilee and Ten Fields.