Tullow Oil gained after Africa Oil, its partner on some East Africa oil exploration, sold stakes in some assets to Maersk Oil and Gas.

Maersk will buy half of Africa Oil’s holdings in three onshore exploration licenses in Kenya and a further two in Ethiopia, the company said in a statement.

The licenses cover an area of around 100,000 square kilometres. Tullow operates four of the blocks.

Shares of Tullow gained as much as 17 per cent in London, the most since November 3. Africa Oil soared as much as 48 per cent in Stockholm trading, the most since May 2012.

“This is a big vote of confidence on the quality and materiality of these assets,” analysts from FirstEnergy Capital said in a note.

The announcement is “very positive” because it provides “imminent cash injection” and eliminates any funding concerns, they said. Maersk will make an upfront payment of $365 million which includes exploration costs.

It will make a further potential payment of $480 million for the Lokichar project, contingent on the size of the resource after final appraisal and an agreed timetable for first oil, the company said.

The South Lokichar project in northern Kenya, has “gross contingent resources” of 616 million barrels of oil equivalent, according to a September presentation by Africa Oil.

Shares of independent oil explorers and producers have been battered this year as concerns mount about their ability to withstand the slump in oil prices.

Tullow has fallen 39 per cent so far this year, compared to an average drop of 7 per cent across a group of its peers compiled by Bloomberg Intelligence.

Tullow has made some of Africa’s largest oil discoveries in the past 10 years.

Bloomberg