Congo (Brazzaville) - Marine XI & XIV

In reply to SW10Chap (post #53)

I guess you missed the sub-text to that comment.

Delays, per SW10's Law, have always been to be expected.  I now know a bit more about the reasons why this is sometimes so.

There is a difference between knowing that there may be SW10-style delays in getting from A to G, and seeing the route from A to G at each individual step. In the latter case one can recognise that points B, C, D, E and F are not in quite as straight a line as some might hope or suppose [and that some of these intermediate "out of the way" points that cause delays may be good and others may not].

ee

Looking at the announcement again, 3 additional things come to mind.

1)The test rates are likley constrained by the burner set up (ie dont melt the rig), so although relatively low, if one plots the 2 choke settings vs rate, a "potential" 1 1/2" choke setting has a flow rate of approx 7000bopd. (this is how well testers construct a "choke performance curve").Shame they did note quote a flowing pressure.

In normal production 1 1/2" is still quite small.

2) The 7mmscfd gas rate is combined(DST1&2), so the layer with the oil has a GOR (gas oil ratio) of 960 scf gas/bbl (2.5mmscfd/2600bopd). That potentially indicates quite nice crude,though the gas could be full of nasties- C02 & other inerts)

3)The DST2 gas layer may be simply the gas cap above the oil as they are only 10 meters apart. If separate the spare gas layer could be valuable in its own right but also in lifting fluids from the deeper zone in a development scenario.Not sure what the carbonate stratigraphy is like here.

FH

In reply to flyinghorse (post #55)

Re the carbonate point FWIW I understand that the field would likely be developable with perhaps 2-3 highly deviated wells and that there is spare pipeline capacity for gas/oil in the immediate vicinity. It will, however, take some months before a definitive plan can be devised with the benefit of integrating the well info into the rest of the data - but I'd guess we might expect to see another well being tacked on to next summer's planned two explo wells on Marine XI and Marine XIV.

ee

The share price has been declining for the last 5 days, and the rate of decline has increased this morning. I am wondering if the "plug and abandon" line in Monday's news has been misinterpreted by the market, or is there another reason?

What are they drilling next, and when will it be completed?

MadDutch
(who almost never bothers with TMF these days, more fool them).

In reply to MadDutch (post #57)

What are they drilling next, and when will it be completed?

I think the answer to that is "TGD ....much soooner than many seem to expect"........though coincidentally I have an enquiry pending.  TGD should spud sometime towards the end of Q1 IMO and I am personally expecting other positive news to emerge before then....FWIW

ee

In reply to MadDutch (post #57)

Bit OT but FWIW.....

MD, I wouldnt read too much into the SIA decline, the price of E&Ps (Mid and small) have been comign back across the board (at quite a rate). A bit surprising perhaps given the weakeness in the $ and the coincident solidity of the POO.

Seems to be a bit of derisking going on across the whole market and indeed the sector. This could be due to the run in to the end of the year (profit taking, quaring books etc). A bit early if it is but not overly surpising given that nearly every FM I speak to these days seems ot be in the mood to go more defensive in terms of stock selection. Volumes are down across the market as well, which doesnt help.

Seems to be a bit of derisking going on across the whole market and indeed the sector.

Funny how people look at things differently. I would personally regard binning the cheap stocks and hanging on to the expensive ones as raising risk rather than lowering it.....but I guess thats what happens when you get a market overdosing on quants, beta and TA!!  ;-)

cheers

ee

Thanks ee & djp. Very useful !

In reply to emptyend (post #58)

"I am personally expecting other positive news to emerge before then....FWIW "

SIA trading stopped at 10:24, something happening, or just Money-am's feed gone down - on SIA alone?

In reply to alano20 (post #62)

re prices: order driven securities put into auction, so not just SIA

http://www.londonstockexchange.com/global/incident/incident.htm

Interesting press comment today:

Chevron Corp. (CVX) is currently working on a plan to produce from a field shared between Angola and the Republic of Congo in 2012.... the Lianzi field..... is located in a joint-cooperative zone shared by Angola and the Republic of Congo, which is also called Congo-Brazzaville.

U.K. independent oil company Soco International PLC (SIA.LN) said this summer it intends to benefit from exploration work undertaken by Chevron in a field shared by Angola and Congo.

...interesting because the field referred to is the Lianzi field, not the N'Sano field that was the one clearly referred to by SOCO in the summer: http://www.stockopedia.co.uk/comment/view/28993/re-drc-congo-k

The N'Sano field is on the northern border of block 0 offshore Cabinda (see slide 4 here) whereas the Lianzi field is in much deeper water in block 14 (see same slide). The N'Sano field clearly pokes into section C of the discontinuous Block XIV that SOCO have in Congo - whereas they have nothing on the Congo side of the border where the Lianzi field is.

This could of course be a case of a journalist putting 2 and 2 together and making 4.671........but just possibly there is more to it? I am reminded (from the previous post linked to above) that SOCO intend to farm out only a minority in Nganzi......and I believe that those who have been shown the terms have been seeking more. So perhaps there is some form of quid pro quo acreage under discussion as part of an Nganzi farm-in?

ee

Just returning to this old thread, given that Congo (Brazzaville) is making the news today for three failed wells drilled by Murphy Oil.

This graphic......

..... shows the location of Murphy's MPS block in comparison to SOCO's block XIV location which is a long way inshore - and the more important block XI lies immediately north of XIV.

Conclusion - no real implications for SOCO, as the geological context will be rather different. More drilling is scheduled on XI and XIV this year, though perhaps we may not have an interest by then (even though the first well is scheduled to spud on block XIV around the start of March ;-))

It is perhaps worth noting that Murphy's own release says they are nearing agreement on improved fiscal terms. IIRC there was some discussion of such matters on SOCO's blocks (may be wrong on that.....but there was some sort of "terms" factor in the wings for SIA, I seem to recall from a year or more ago).

ee

In reply to emptyend, post #65

G'day ee

IIRC there was some discussion of such matters on SOCO's blocks (may be wrong on that.....but there was some sort of "terms" factor in the wings for SIA, I seem to recall from a year or more ago).

I believe that was specific to the Viodo accumulation, considered marginal by Soco? I imagine Murphy's negotiation is on similar grounds? Congo-B has improved terms for marginal fields before....interestingly, M'Boundi was one such....quite a fuss being made to reverse the advantage a year or two down the line!

I believe that was specific to the Viodo accumulation, considered marginal by Soco? I imagine Murphy's negotiation is on similar grounds? Congo-B has improved terms for marginal fields before....interestingly, M'Boundi was one such....quite a fuss being made to reverse the advantage a year or two down the line!

Thanks. That all sounds about right. AFAICT the next well is targetting a gross 35-40mn bbls and the one later on block XI is targetting nearly double that, so perhaps the economics will change a bit if one or both come in. No idea yet on CoS numbers etc though (and it wouldn't matter much what they are, given recent experiences!  ;-))

ee

In reply to emptyend, post #65

I see that the graphic seems to have disappeared from my post earlier. It can be found here.

In reply to emptyend, post #65

first well is scheduled to spud on block XIV around the start of March

Not any more it seems from the latest presentation: it is back to the start of August...so there is abit of a gap (ex TGT).

....wonder what might happen in the interim  ;-)

I assume that the change is down to a rearrangement of drilling priorities on a shared rig, so the early slot has been given up.

ee

Congo wells according to Lundin’s latest presentation :-

Makouala-1 Marine XIV, gross unrisked 37 mmboe CoS 32%
Lideka-1 Marine XI gross unrisked 64 mmboe CoS 23%

Yeah - saw that. I think SOCO's view is that both are a bit bigger (50mn for the first), but there isn't a lot in it.

rgds

Might as well use this thread for what it was intended for. Lundin have announced the spud of the next well this morning:

Lundin Petroleum: LUNDIN PETROLEUM SPUDS EXPLORATION WELL MAKOUALA MARINE-1 ON CONGO (BRAZZAVILLE) MARINE XIV LICENCE

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that drilling of exploration well Makouala Marine-1, located offshore in Block Marine XIV Congo (Brazzaville) has started.

The planned depth is approximately 2,700 metres below mean sea level and the well will be drilled using the semi-submersible drilling rig ENSCO 5003. The drilling operation is expected to take approximately 30 days.

The well is targeting a post-salt Sendji Formation reservoir within a four-way dip closed structure.

Lundin Petroleum has a 21.55 percent working interest in the licence which is operated by SOCO International

My guess is that the CoS on this one is a bit higher than the last (though it is much smaller...c50mn bbls estimated recoverable on pre-drill estimates IIRC)....not enough to move the needle for SOCO International (LON:SIA).

ee

Passing mention of SOCO's acreage in this bullish article on West African pre-salt potential:

Speculation runs high because the first two drillers to find pre-salt oil off Angola haven´t estimated the reserves.

The first find off Angola was claimed by Danish explorer Maersk Oil, which said its Azul-1 well might produce more than 3,000 barrels a day. Cobalt International Energy Inc. on Jan. 10 said its pre-salt Cameia-1 well in the west African country’s Kwanza basin found a “high-quality” oil reservoir. The Houston-based explorer will drill the Bicuar prospect later this year.

“This is proof that the petroleum system is there,” said Lars Nydahl Jorgensen, Maersk’s head of exploration. “Is it as big as Brazil? It’s far too early to say.”

Extending Reach

North of Angola, companies such as Soco International Plc, Ophir Energy Plc and Petrobras are targeting pre-salt wells in the Republic of Congo and Gabon. Drilling will be cheaper in Gabon than Brazil, because of shallower waters and thinner salt layer, Ophir CEO Nick Cooper said.

“There is potential there,” said Roger Cagle, the chief financial officer at Soco, which found pre-salt oil in the Congo basin last month, though in quantities too small to be commercially viable. “It’s just a different setting.”