Afren (LON:AFR) , the FTSE 250 oil and gas group, has strengthened its position in East Africa by acquiring a 74% operated working interest in the Tanga block, which lies onshore and offshore Tanzania. The deal is Afren’s first move in Tanzania and gives it new acreage that extends the same coastal high and basin trough plays from its contiguous operated blocks L17/L18 further south in Kenya. It is now planning to carry out 900km of shallow and deep water seismic surveys and may drill one exploration well in the fourth quarter of 2011.

Afren acquired the Tanga stake from Petrodel Resources Ltd, which has retained a 26% interest in the block. Afren has agreed to reimburse Petrodel a percentage of the back costs in relation to the block and will also fund the forthcoming seismic survey work. It will also carry Petrodel through the drilling of one shallow water exploration well subject to a cumulative cap on gross costs of US$40 million. The news pushed the Afren share price up by nearly 4% to 160.1p.

Until last year, Afren’s E&P portfolio was largely concentrated in West Africa. However, the acquisition of Black Marlin Energy in October saw it take on 12 new assets, with a major focus on the west of the continent. In an interview with Stockopedia in February, Galib Virani, an associate director and Afren’s head of acquisitions, said that East Africa had “tremendous potential”.

The Tanga block lies northernmost coastal Tanzania, directly south of and adjoining Kenyan blocks L17 and L18 in which Afren holds a 100% interest. The licence includes onshore, shallow marine and deep marine areas. The block is covered by 200 km of legacy 2D seismic data, and 1,200 km of good quality new 2D seismic data covering mainly the deeper water area, which was acquired by Petrodel. The Tanga block is well located as it includes a deep basin with a very thick sedimentary section that has the potential to host several source rock intervals and reservoir/seal pairings. Potential petroleum plays recognised to date are Lower Cretaceous sands deposited in deltaic to shallow marine environments, Upper Cretaceous submarine fans, Eocene shelf sands and Miocene fluvial and deltaic sands. There are structures, particularly along the western flank of the basin, which are interpreted to form viable traps. Some of these lie in…

Unlock the rest of this article with a 14 day trial

Already have an account?
Login here