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Monday, June 16, 2014
Namibia saw another disappointment off its coast, this time with the drilling of the Welwitschia-1A well on PEL0010 where Repsol is the operator. Tower Resources, Repsol’s partner, reported that the well reached a total depth of 2,454 meters; unfortunately logging evaluations indicate that the Palaeocene, Maastrichtian and upper Campanian section reservoirs were less well-developed than prognosed and no hydrocarbons were encountered.
The well was spud on May 1 and fell behind schedule due to operational issues during drilling and logging, including the onset of winter weather conditions.
Current expectations from Repsol are that costs will now be around 10% in excess of the $91 million gross firm well budget. The estimated cost of continuing the current well to test the deeper targets, including the Albian, now appears to be as much as a further $40 million gross. According to Tower, despite its interest in the deeper targets with their large potential resources, the question of whether it may be better to wait for the full analysis of the current well before deciding whether and where to drill a second well and test the deeper targets with the benefit of further information arose. As a result, the partners agreed not to drill further at this time and to evaluate the information and its implications for the block. The well is being plugged and abandoned.
Nigel Quinton, Head of Exploration commented: “Our first well in this huge frontier block has shown that the Maastrichtian and Palaeocene reservoir sands were less well-developed in this location than we had hoped for, which was always recognized as a critical risk factor. As of now, our view of the prospectivity of the deeper section including the Albian carbonates, remains unchanged. As usual in frontier areas, it will take time to fully interpret the results of the well and assess the implications for the remaining prospectivity of PEL0010.”
Jeremy Asher, chairman, commented: “Obviously we are disappointed, but we await the more detailed analysis and will then consider our options afresh. Shareholders will recall from the CPR that the chances of success in these upper targets ranged from 31% downwards to 8%, with lower chances as we went deeper, and facing odds like this is the nature of our business. Knowing this, our strategy has been to diversify our asset portfolio with the recent acquisitions of assets offshore South Africa, in Zambia and onshore Kenya, and we have applications in progress in Cameroon, Ethiopia and elsewhere. We want to keep our options open on PEL0010, but we also want to conserve sufficient funding for the commitment work that lies ahead on our other assets, which hold great promise.”
Graeme Thomson, CEO, stated: “The well emphasizes the risk of exploration and the wisdom of having moved to diversify our portfolio. We expect much activity in the coming months on and in the areas surrounding our assets. In South Africa we await the new 3-D on our Algoa-Gamtoos block and Total is scheduled to be drilling its Brulpadda-1 well on the adjacent block shortly. Planning for our year-end Badada-1 well on Block 2B onshore Kenya is underway and regional activity is rising. Our projects in Zambia, SW Orange Basin SA, Cameroon, Ethiopia and elsewhere are gaining momentum.”
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