2nd UPDATE: Anadarko, Tullow Eye Huge West Africa Oil Promise

Shares in Anadarko Petroleum Corp. (APC.LN) and Tullow Oil PLC (TLW.LN) rose more than 8% Wednesday after news they discovered oil off the coast of Sierra Leone, signalling multi billion-barrel potential for further finds in an area stretching east through the waters of Liberia, Cote d'Ivoire and into Ghana.

Analysts said geological structures in this area could be a major new oil system with the potential to transform Tullow and Anadarko, both of whom have commanding positions in exploration licenses there.

"The Venus discovery confirms the existence of an active petroleum system in the basin and enhances the prospectivity of our vast West Africa acreage position," said Bob Daniels, Anadarko's senior Vice President of Worldwide Exploration.

Venus was drilled to a total depth of approximately 18,500 feet in about 5,900 feet of water and encountered more than 45 net feet of hydrocarbon pay. It is the first deepwater test in the Sierra Leone-Liberian Basin.

With the 1.2 billion barrel Jubilee field already discovered in Ghana at the eastern limit of the system and this success at the Venus well at the western limit in Sierra Leone, "we have established bookends spanning approximately 1,100 kilometers across two of the most exciting and highly prospective basins in the world," he said.

Tullow's Exploration Director Angus McCoss said the area certainly has multi billion-barrel potential and contains over 30 leads, six of which are prospects on a similar scale to the Jubilee field.

The Venus discovery is the same type of reservoir as Jubilee, said Daniels.

"Wells drilled in Ghana, Côte dIvoire, and Sierra Leone over the next 12 months could unlock 1.36 billion barrels of oil equivalent net to Tullow and 0.92 billion boe for Anadarko," said Bernstein Research. This is 4.5 times Tullow's current booked reserves and 40% of those of Anadarko, it said.

The Venus discovery has increased the likelihood of the companies making additional discoveries, said Panmure Gordon analyst Peter Hitchens. "If you've got hydrocarbons at two extremes, there's a good chance of hydrocarbons being in the middle," he said.

However, NCB Stockbrokers analyst Peter Hutton cautioned that a large amount of upside from future West African oil discoveries is already priced in for Tullow. "Sell into strength, but leave some position for a (takeover) bid, which looks even more inevitable after this confirmation," Hutton said.

Anadarko will soon drill another wildcat well offshore the Ivory Coast on the South Grand Lahou prospect, using the same rig that drilled Venus, McCoss said. Both Tullow and Anadarko have access to a fleet of rigs and McCoss envisaged further drilling in the Liberian basin in 2010.

"It will take time to get there - a couple of years of exploration drilling and appraisal drilling," said McCoss. "This is the start of a long journey."

The scale of this opportunity means Tullow has no desire to sell the company, McCoss said, adding: "We are a long-term business.". Tullow has long been the subject of takeover speculation.

Anadarko operates the Venus well with a 40% interest. Its co-owners are Woodside Petroleum Ltd (WPL.AU) of Australia with 25%, Spain's Repsol YPF SA (REP.MC) with 25% and Tullow with 10%.

At 1500 GMT, Tullow shares were up 8.2%, or 89 pence, at 1176p and 67% higher than year-ago levels. Anadarko shares were up 8.3%, or $4.92, at $64.09, up 22% from 12 months earlier.

   -By James Herron, Dow Jones Newswires; [phone]; [e-mail]