Dana Investment Programme

12th May '09 by emptyend

95 comments 17743 reads

NO TA ON THIS THREAD PLEASE

With the AGM only three weeks away now and the usual "close to the chest" approach being followed prior to revealing their drilling plans at the AGM, it is interesting to see the following comment: http://www.upstreamonline.com/live/article178252.ece

UK-based producer Dana Petroleum said it plans to invest $130 million in Egypt this year. "It's considered our largest investment," Stuart Paton, the company's technical and commercial director, told Reuterswithout giving details of how the money would be spent. "That is about 35% of our total group investment internationally. We have about 25% of our production here in Egypt," Paton added.

In addition to the earlier wells in the Gulf of Suez (South October and South East July), there are other wells planned in that area but, perhaps more importantly, there are also two wells planned on West El Burullus [offshore from the Nile Delta] where they made a decent gas find in June 2008 on the KES-CC1 prospect. Pre-drill KES-CC1 was reckoned at 375bcf and, IIRC, the well was considered to be indicative of rather better than that (though was constrained by equipment). They have a further 1.5 TCF of potential targets in the pliocene, close to KES-CC1 and there is a deeper horizon that has potential....... so, the WEB wells in Egypt have the potential to be very interesting in coming months.

But that's not all! The long-awaited Tornado prospect off Shetland is also now only a few months from getting drilled (and that is considered to be 90-100mn bbls pre-drill) and the Trolla prospect in the Norwegian North Sea isn't far behind - and that is reckoned to be 240mn bbls P50 pre-drill. Trolla is due to spud in August: http://www.investegate.co.uk/Article.aspx?id=200903300700166771P and the Eitri well (also in Norway on Jotun) spudded last month.

So - watch this space for more news on the drilling upside following the AGM (on 1st June). I suspect it might be a rather interesting programme.

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emptyend

14th Oct '09

Don't think it will have been flow-tested yet, Marben. I'd guess they'll flowtest the side track though. They would call it a discovery just from the logs......but the key question is will it be commercial...and that means flow-testing.

ee

15th Oct '09

Re the issue of gas v oil, I haven't been able to scour the various comments as thoroughly as usual, but it seems quite possible to me that that they would have drilled at a location which was near the crest of the structure - and therefore probably will have drilled though a gas cap. If that is the case, then the real news will be the sidetrack - and the hydrocarbon mix will be as relevant as the flow rates and lateral extent of the structure.

ee

SW10Chap

In reply to emptyend (post #56)

They would call it a discovery just from the logs......but the key question is will it be commercial...and that means flow-testing.

I think this done this on the basis of preliminary wireline logs (or possibly the LWD, though I'd imagine they'd prefer to have wireline before going public). The phrase...

extensive data collection is currently underway

...suggests that formation testers (and possibly well-imagers and core-samplers) were next on the programme. The formation testers will help determine the all-important pressure gradients and regime - as well as perhaps yielding a fluid sample or two. (The well-imagers, whilst all very pretty and exciting, are mainly for geologists, as are the cores.)

A sidetrack is being planned to delineate the discovery and determine hydrocarbon fluid types and overall size of this new field.

I don't really understand this bit - I get the impression that there's more going on here than they say. (Oh. Is it Dana?) On one hand, a single sidetrack wouldn't give them all that delineation information; on the other, what hydrocarbon fluid type info would they get from the sidetrack that they wouldn't from the first well?

they encountered the bottom of the reservoir without finding the oil/water contact hence the need to sidetrack to try to estimate the size of the oil accumulation. [doverbeach]

I guess this comes from a different release? That's the only thing I can think of that would make a sidetrack worthwhile, which suggests that they think they've drilled just a little too far up-dip in the structure. And of course, the well-imagers and cores might help the rock-doctors with that assessment...

SW10

shanklin100

Mmm, doesn't seem likely that an overall -ve reaction to the latest RNS is appropriate. Still it was significantly up until some point in the afternoon yesterday when IIRC it suddently went to being circa 60p down, from which it later recovered but not to the levels of earlier in the day... ...so perhaps there is just a big seller out there.

Apologies if my 60p is wrong but I certainly remember it being a very large quick drop in SP.

Cheers, martin

On one hand, a single sidetrack wouldn't give them all that delineation information; on the other, what hydrocarbon fluid type info would they get from the sidetrack that they wouldn't from the first well?

If they thought they'd drilled a gas cap and were sidetracking looking for the oil leg...........

doverbeach

I guess this comes from a different release?

It came from the RBC broker note - sorry nothing to link to

16th Oct '09

In reply to emptyend (post #60)

Hmm, maybe - though the release says

The well discovered gas and oil in Tertiary reservoir sandstones and extensive data collection is currently underway. The thickness and quality of the reservoir is in line with pre-drill prognosis. A sidetrack is being planned to delineate the discovery and determine hydrocarbon fluid types and overall size of this new field.

Having said that, I don't know what they mean by determine hydrocarbon fluid types - how many types of hydrocarbon fluid are there? I've only ever come across two - but then maybe I've only worked some very dull provinces...

Seems to me that the types issue may be slightly more complex? AFAIAA, a condensate option lies between gas and oil on the API scale......and a predominantly oil structure may be overlain by both condensate and gas?

Anyway = pointless to speculate at this time .......but the sidetrack info may be much more relevant than the market price of the shares, post RNS, appears to indicate.

ee

thebuffoon

how many types of hydrocarbon fluid are there? I've only ever come across two - but then maybe I've only worked some very dull provinces...

You've obviously not worked for Frontera...

Buffy

Cuthbert C

I remember a previous situation where Dana did something they described as "DNA analysis" (note 1) on oil samples so as to figure out if it was identical to oil from known reservoirs/strata nearby and thereby help figure out inter-connectivity and sourcing.

Note 1 - not sure if they were talking literally about DNA - I'd think that unlikely - more probably they were speaking figuratively and just meant very precise chemical analysis

marben100

19th Oct '09

Today's announcement by Dana of a farm-in to offshore Guinea looks like a "distressed asset" situation, judging by this. Seems that Tom Cross is on dealmaking form.

As Dana's announcement indicates, Guinea is an "interesting" place to explore, neighbouring Sierra Leone. According to Anadarko's description of the recent Venus discovery:

Bob Daniels, Anadarko Sr. Vice President, Worldwide Exploration. "With Jubilee on the east and Venus on the west, we have established bookends spanning approximately 1,100 kilometers (700 miles) across two of the most exciting and highly prospective basins in the world.

I guess we'll see whether the eastern "bookend" can be moved further east still.

Cheers,

Mark

Looking around for some background on the Tornado prospect, I came across this piece:

The Tornado Prospect lies in 1,040m water depth at a depth of around 2,500m TVDSS. It is a stratigraphic trap at Palaeocene T38 level. Tornado is interpreted as a basin floor fan deposited at the toe of a sequence of progradational clinoforms. The Prospect is sealed by the overlying T38 mudstones and the source is from the underlying Kimmeridge Clay. There is a strong amplitude anomaly associated with the Tornado Prospect, which demonstrates structural conformance. Rock physics and AVO studies based on nearby well control supports oil rather than gas as the most likely hydrocarbon phase. Mapping has been conducted using both 3D and new long offset 2D data. In addition, a controlled source electromagnetic survey was shot over Tornado in 2006 by EMGS, which also gives positive indications of the presence of hydrocarbons. Accordingly, a low to moderate risk of 35% chance of finding hydrocarbons has been assigned to the Prospect.

OMV has undertaken a probabilistic resources evaluation for the Tornado Prospect. Pmean estimates are 84 MMBO and 38 BCF of associated gas, giving a total of 90.6 MMBOE resources, with a P10 case of 176 MMBOE. The fluid is expected to be oil with a quality similar to Schiehallion (25-27 API and GOR of 350-500 scf/bbl). This is supported by rock physics modelling and inversion of the 2D and 3D data. Based on the current evaluation, roughly 75% of the volume is in 204/13 and 25% in 204/14b.

For the avoidance of doubt, DNX has 30% in both blocks referred to.

It will be interesting to see how the GOR compares with the pre-drill estimates once they've been able to assess the structure more completely (with the sidetrack data).

26th Oct '09

With all the fuss over the Tornado discovery and sidetrack (ongoing .....does anyone have an expected end-date?) it is easy to forget that the Jetta well is also drilling, having spud on 10th October. This prospect is clearly one that partner Det norske is very keen on:

We expect to find oil in the Palaeocene sandstone approximately two kilometres below the seabed; thanks to modern 3D seismic shooting, we believe that we can actually ’see’ the oil. This is an area in which important discoveries have been made before, including Balder, Jotun, Ringhorne and Grane.

‘If a discovery is made, Jetta can be quickly put into production since it can be tied in with existing infrastructure. A discovery can contribute to extending the economic life of the installations in the area, and hence increase total recovery from existing fields as well. If successful on Jetta, Det norske will be able to considerably increase its oil production from today’s rather modest level in the course of two or three years.’

Jetta is targetting up to 60mn boe. though DNX's best estimate from the AGM was 40mn boe gross (12mn net)....not as material as Tornado but also worth watching for.

ps....Jetta well status will appear here: http://www.npd.no/engelsk/cwi/pbl/en/well/all/6185.htm

28th Oct '09

and here is the Jetta news: http://www.investegate.co.uk/Article.aspx?id=200910280700064751B

Oil was proven, but with less reservoir thickness than expected. Data has been gathered in the reservoir zones, including pressure tests and oil samples. The partners have decided to drill a sidetrack well to investigate if the discovery is commercial.

2nd Nov '09

Tornado sidetrack finished.....http://www.investegate.co.uk/Article.aspx?id=200911021000567572B

The original well, 204/13-1, discovered gas and oil in Tertiary reservoir sandstones which are approximately 90 feet thick, with average porosity of 28.5%. The sidetrack, 204/13-1Z, drilled approximately 120 feet of sandstone with average porosity of 29%. The thickness, quality and extent of the reservoir are in line with pre-drill prognosis.

The gas-oil contact which was penetrated in the original well was encountered in the sidetrack at the same depth. An oil-water contact was penetrated in the sidetrack consistent with the oil column observed in the original well. Extensive sampling of the fluids has been undertaken.

Cross talks of oil and gas finds in both wells......but there are no figures for composition of hydrocarbons (yet, at least)......which still seems a crucial point to me!

Opaque or what?! Perhpas we'll learn more when FPM annuounce. They haven't RNSed yet.

I am suspicious as Dana have given no indication of commerciality.

......my thoughts exactly. This is where previous failures to distinguish between technical successes (eg discovery at Faucon) and commercial successes comes back to haunt the market!

ee

FPM comment

Graham Stewart, Chief Executive of Faroe Petroleum commented:

"We are very pleased to report the successful outcome of the
side-track appraisal well, which has reconfirmed the presence of a
significant accumulation of hydrocarbons and, based on the
preliminary logging data, the results exceed the prognosed net
hydrocarbon column and has found better than predicted reservoir
quality. With the benefit of the substantial data we now have,
further extensive analysis will be undertaken in the coming months to
determine the optimum means of exploiting this exciting discovery.
The Tornado discovery also has a positive and exciting impact on
Faroe's 100% held L002 (Faroe) and P1552 (UK) licences, on which we
are now commencing a new programme of analysis with the benefit of
the substantial new Tornado data.

......seems to me that this translates as "mainly gas" - otherwise they would surely have bigged it up more?

In which case the market reaction would seem to be about right?

FPM aren't quite so opaque as TC

http://www.investegate.co.uk/article.aspx?id=20091102102100H1879&fe=1

"We are very pleased to report the successful outcome of the side-track appraisal well, which has reconfirmed the presence of a significant accumulation of hydrocarbons and, based on the preliminary logging data, the results exceed the prognosed net hydrocarbon column and has found better than predicted reservoir quality. With the benefit of the substantial data we now have, further extensive analysis will be undertaken in the coming months to determine the optimum means of exploiting this exciting discovery."

Cheers, Martin

In reply to emptyend (post #67)

It is worth revisiting this pre-drill info, IMO:

OMV has undertaken a probabilistic resources evaluation for the Tornado Prospect. Pmean estimates are 84 MMBO and 38 BCF of associated gas, giving a total of 90.6 MMBOE resources, with a P10 case of 176 MMBOE. The fluid is expected to be oil with a quality similar to Schiehallion (25-27 API and GOR of 350-500 scf/bbl). This is supported by rock physics modelling and inversion of the 2D and 3D data. Based on the current evaluation, roughly 75% of the volume is in 204/13 and 25% in 204/14b.

We now know that:

the area of the structure is in line with expectations
reservoir was somewhat better than expected
the net hydrocarbon column was greater than expected

......so it wouldn't be unreasonable to think that, ex-post, we are looking at about 100mmboe, rather than the 90.6 previously indicated as the P50. However, there is a pretty clear subtext to all the releases that suggests the gas content is much greater.....so perhaps, instead of looking at 84MMBO with 8% associated gas, we may be looking at something like 50MMBO .....with the other 50MMBOE being gas???

Complete guesswork on my part....other guesses welcome!

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Emptyend

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