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Thursday, February 13, 2014
Africa Oil Corp. issued an update on its activities in East Africa as well as gave a glimpse as to what its 2014 work program will include.
The company and its partner Tullow Oil Corp. have made excellent progress with the exploration and appraisal program in the South Lokichar basin in northern Kenya which is the site of seven consecutive significant oil discoveries. Currently the partners have three drilling rigs and a test rig operating in the basin.
Well testing at Etuko-1 from five identified Lokhone pay intervals confirmed the previously announced discovery. Light 36˚API waxy crude oil was successfully flowed from three zones at a combined average rate of over 550 boepd. Additional potential pay zones with good oil shows were identified in good quality Auwerwer sandstones over a 200-meter interval shallow in the Etuko-1 well but were not able to be evaluated due to a large hole size. The rig was skidded over and will now drill a 650-meter well to evaluate and potentially test this upper reservoir section.
The rig that recently completed drilling the Amosing discovery mobilized to the Emong prospect and spud the well on February 5. The Emong-1 well is west of Ngamia-1 and is targeting high quality Auwerwer sandstones. The prospect is fault offset and updip from the large Ngamia oil discovery which has over 200 meters of net oil pay. The gross best estimate of prospective resources for Emong are 242 million barrels of oil based on a third-party independent resource assessment. The well has a planned total depth of 1,500 meters and is expected to take 40 days to drill.
The rig that recently completed drilling the Ewoi discovery has mobilized to drill the first of three planned back-to-back appraisal wells at the large Twiga South oil discovery. Twiga South-2 which is planned to spud in mid-February, is to the west of the Twiga South-1 discovery well and is updip on the structure. The well is designed to assess the areal extent of the high quality Auwerwer net pay encountered in the discovery well and also the prospective resources associated with up to 150 meters of shallower, water-bearing high quality Auwerwer net sands encountered at Twiga South-1 that are within mapped closure at this location. The Twiga South gross best estimate of unrisked prospective resources for the discovery are 132 million barrels of oil based on a third-party independent resource assessment. The well has a planned total depth of 2,000 meters and is expected to take 45 days to drill. An extended well test of the Twiga South field is being planned for towards the end of the year.
A light well testing and completions rig has been mobilized and has commenced testing operations on the Ekales oil discovery. Testing operations on Ekales-1 are expected to be complete by end March 2014.
A large 3D seismic survey over the western flank of the South Lokichar basin has commenced and civil construction on several exploration and appraisal locations is being progressed to keep pace with the aggressive drilling program.
Given the significant contingent resources associated with discoveries to date and the extensive exploration, appraisal and seismic program planned to fully assess the upside of the South Lokichar basin, Africa Oil and Tullow have agreed with the government of Kenya to commence development studies. In addition, the partnership is involved in a comprehensive pre-FEED study for an export pipeline. It is hoped that the JV partnership will see project sanction for development, including an export pipeline, by 2015/2016. If further exploration success opens additional basins there will be scope for the development to be expanded.
Africa Oil said its work program for 2014 will include at least 20 exploration and appraisal wells, extended well tests on the South Lokichar basin discoveries, and will include exploration wells targeting four new basins.
The Sala-1 well in Kenyan Block 9 will spud mid-February and Africa Oil will operate this well on behalf of its 50% JV partner Marathon Oil Corp. The prospect is a large three way dip closed structure against the rift bounding fault in the Cretaceous Anza rift in a similar structural setting to the Tertiary Ngamia discovery in Block 10BB. Sala is updip from the Bogal-1 well drilled in 2010 which appeared to find a significant gas accumulation and also near the Ndovu-1 well drilled in 1988 which had significant shows of oil and gas. The unrisked prospective resources for Sala are approximately 400 million barrels of recoverable oil based on a third-party independent resource assessment. The well has a planned total depth of 3,450 meters and is expected to complete by end April. Additionally, preparations are being made for drilling in the South Kerio and West Turkana basins later in the year exposing the company to multiple potential basin opening wells in Kenya.
In the South Omo Block in Ethiopia the rig is currently moving to the previously undrilled Chew Bahir basin, to drill the Shimela prospect in the eastern portion of the block where new seismic has delineated a number of exciting new prospects, some of which have encouraging seismic amplitude anomalies that map with closure. The well is expected to spud at the end of Q1 with the aim of derisking some further 15 prospects and leads across the basin. The company has a 30% interest in the block which is operated by Tullow with a 50% interest and Marathon Oil holding the remaining 20% interest.
In Block 8 in Ethiopia, drilling continues on the El Kuran-3 well with the current depth being 2,850 meters. The well encountered a 1,200-meter section of Jurassic Hamanlei carbonates, with wet gas and oil shows throughout the interval, similar to the El Kuran-1 well drilled in 1972. The reservoirs are low porosity and permeability and will require acid or fracture stimulation to produce at commercial levels. A decision was taken to deepen the well to the below the planned target depth to evaluate the deeper Gumboro zone which has significant gas condensate potential. The revised total depth of the well is 3,500 meters and is expected to be complete in April. The company has a 30% interest in the block which is operated by NewAge.
Keith Hill, president and CEO of Africa Oil commented, “We have a very exciting exploration and appraisal program set out for 2014 which will see us complete over 20 wells. Currently we have seven rigs running and after releasing one in mid-year will have six rigs running full time through the remainder of the year. Our program has three objectives, to appraise the existing key discoveries, to drill out the remaining prospects in the South Lokichar basin and to open at least one of the four new basins being tested along trend. Additionally, we are pushing hard to move the development studies along with the aim of sanctioning a pipeline development for the South Lokichar basin in the period 2015/2016. This fully funded program should continue to deliver high potential upside value for shareholders through this year and beyond.”
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