Tue Jan 13, 2009 5:02am EST
(Adds comment from Heritage CFO, Tullow CEO, analyst, shares)
LONDON, Jan 13 (Reuters) - British oil explorer Heritage Oil Plc (HOIL.L: Quote, Profile, Research, Stock Buzz) said it had made a "world class" oil discovery in Uganda, which could become its biggest ever find.
Reserves in the Giraffe 1 well in the Lake Albert Rift Basin and a linked discovery known as Buffalo, which was announced in December, could total more than 400 million barrels of oil, Heritage said on Tuesday.
The finds, in an area of the basin in western Uganda known as block one, may extend further to the north and east and could include the Buffalo East prospect, which Heritage said could create a very large structure of up to 90 square kilometres.
Finance director Officer Paul Atherton said 18 wells the company had drilled in the basin so far had produced oil and there were "numerous other" drilling targets in block one.
Atherton said Buffalo and Giraffe could eventually be larger than the company's previous biggest find, a discovery of 500-600 million barrels of oil in the M'boundi field, Republic of Congo.
"I think Buffalo-Giraffe will be the biggest discovery we have made over time," he said.
Heritage plans to do further drilling in block one later this year and it could take two to three years to uncover the full potential of the basin, Atherton said. "I would like to think we can get some early developments within that timeframe."
Heritage runs block one and another block, 3a, and has a 50 percent equity stake in the exploration licences, with Tullow Oil (TLW.I: Quote, Profile, Research, Stock Buzz) holding the other 50 percent.
Tullow also runs block two in the basin, which it owns outright. "Combined with our other finds in the region, we have now clearly exceeded the thresholds for basin development," chief executive Aidan Heavey said.
"Options for commercialisation and first oil production are currently being fast-tracked," he said.
RBC Capital Markets said although further drilling was needed to reduce the risks inherent in Buffalo-Giraffe, "with 1 billion (barrels worth) of oil-in-place potential, today's result is significant".
Heritage shares were up 1.6 percent at 220.75 pence by 0955 GMT, while Tullow shares were down 7.4 percent at 654.5 pence. (Reporting by Philip Waller, Editing by Dan Lalor)
http://www.reuters.com/article/rbssEnergyNews/idUSLD3598420090113
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