Continental Focus, International Reach

Kenya and Ethiopia Keeping Africa Oil Busy

Thursday, December 12, 2013

Africa Oil Corp. gave an update on continuing activities in Kenya and Ethiopia. The company said that drilling operations continue in Kenya’s South Lokichar basin. Africa Oil and Tullow Oil, the operator, spud the Amosing well and it is drilling ahead on schedule. The well is expected to be completed by the end of January.

The rig which recently completed the Agete discovery on Block 13T is being mobilized to the Ewoi Prospect, which is expected to spud by the end of the year. The Ewoi is a large faulted structure updip from the recent Etuko discovery on the Rift Flank portion of the basin. The two lightweight rigs in the basin are currently being rigged up for testing on the Etuko and Ekales discoveries and test results for both are expected early Q1 2014.

The 3D seismic survey over the western flank of the basin is also expected to commence before the end of the year and civil construction on several exploration and appraisal locations has been accelerated to keep pace with the aggressive planned drilling schedule.

The company had some bad luck on its Block 9 operated well, the Bahasi. The well was drilled to a depth of 2,900 meters, encountering metamorphic basement at 2,850 meters. A thick section of Tertiary and Cretaceous interbedded sands and shales were encountered with only minor shows of gas throughout the section, subsequently Africa Oil decided to plug and abandon the well. The rig will now move to the Sala prospect location on the northeast flank of the basin to test a large prospect in a separate sub-basin updip from the Bogal well drilled in 2010 which appeared to find a significant gas accumulation. The Sala well is expected to be completed by the end of Q1 2014.

In Ethiopia on the South Omo block where Africa Oil is partnered with Tullow Oil, the Tutule-1 well came up dry, as recently reported by Tullow. The well encountered a section similar to the nearby Sabisa-1 well in the upper portion of the well but the sands which appeared to be oil saturated in the Sabisa well were not present on the Tutule horst block feature with multiple volcanic units and shales in this section. There were gas shows in the section which point to a potential hydrocarbon source and the results of these two wells will be analyzed to determine the future exploration program direction in the North Turkana Basin. The OGEC rig will be moved to the Chew Bahir Basin to drill the Shimela Prospect in the eastern portion of the South Omo permit where new seismic has delineated a number of new prospects and potential source basins. Due to the lengthy move and extensive civil works, this well is not expected to spud until the end of Q1 2014.

On Ethiopia’s Block 8 Africa Oil is drilling ahead on the El Kuran-3 well and current depth is around 1,978 meters. The well has encountered a 1,200-meter section of Jurassic Hamenlei carbonates, with some interbedded sands and anhydrite, with wet gas and oil shows throughout the interval, similar to the results of the El Kuran-1 well drilled by Tenneco in 1972. These reservoirs appear to be fairly low porosity and permeability and, as expected, will likely require acid or fracture stimulation to produce at commercial levels. Oil and gas-condensate was recovered from a sample chamber and is being sent for analysis. At the base of the well, a flow of gas was encountered and the well has been suspended in order to mobilize test equipment to evaluate this zone. A decision has also been taken to deepen the well below the planned target depth to evaluate the deeper Gumboro zone which has significant gas condensate potential. With the recent announcement of a Chinese company entering the basin and potentially providing export infrastructure, the economics of the basin could be vastly improved.

Africa Oil CEO Keith Hill stated, “’While we are disappointed that the Bahasi and Tutule wells did not find commercial hydrocarbons, we look forward to aggressively pursuing other exploration opportunities in other sub-basins within these two large blocks and in the other 9 new basins yet to be drilled. The exploration, appraisal and development studies in the proven South Lokichar Basin continue to be our main focus, but we are still confident we will unlock other productive basins on this trend. This fully funded increased level of activity, with a minimum of six rigs working full time for the foreseeable future, should continue to deliver high potential upside value for shareholders in 2014 and beyond.”


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