Bandon Success

9th Jun '09 by djpreston

18 comments 3823 reads

RNs just out, essentially:

Serica spudded well 27/4-1 on 11 May with the Ocean Guardian semisubmersible drilling rig and drilled to a total depth of 6,233 feet through the Jurassic and Sherwood intervals. Oil was encountered and a sidetrack was drilled to acquire additional data and samples.

The volume of oil in place cannot yet be estimated with certainty as considerable technical work remains to be done, but the results to date are encouraging. Using the geological and petrophysical data obtained, Serica will now carry out a remapping exercise using the 3D seismic data to evaluate further the prospectivity of licence FEL 1/06 as well as the potential of the three remaining Sherwood sand gas prospects in the licence.

Serica CEO Paul Elis said: "This is the first oil discovery west of Ireland for nearly 30 years. Serica's 600 square kilometre licence area contains several prospects and we shall now be evaluating them as potential drilling targets. Although much more work needs to be done before the commercial potential of the discovery and the rest of the licence can be established, the Bandon oil discovery could mark the beginning of an exciting phase of Irish exploration."

Sorry but I hadnt noticed there was activity on SQZ so I started a theread on O&G sector. .

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deucetoace

9th Jun '09

So they go looking for gas but find oil - very nice too. There is infrastructure nearby for the possible gas find they were looking for but is there anything for oil? If not presumably they would need a reasonable sized structure to make it commercial. Upbeat statement from a generally conservative management team though so I have added a few more

djpreston

Hi Deuce.

I was very very pleased with the nice surprise of oil (look at the problems with Corrib for goodness sakes). Hopefully the discovery is of such a size as it will allow an FPSO if nothign else.

The interesting bit will be redefining their knowledge and wonder what that does for the other structures etc?

As you say, the AQZ guys are normally very conservative. So, like you, Ive added more. Staggered the SP hasnt moved up more to be honest. Maybe when the Cannucks wake up?

Cheers

doverbeach

wow, black stuff. There had never been a mention of that possibility!

The Serica AGM is on the 25th June - should be interesting!

Norman115

This is proving too much! I will have to go and lie down. First of all the announcement from Hoil and then an announcement from Serica. Fantastic news. Finding oil is an added bonus. I am so glad that I doubled up last when there was share price weakness. All we need now is some good news about Kumbuna.

Good luck to everyone.

Norman

PS. I like the format of Stockopedia,

In reply to Norman115 (post #4)

Hi Norman

Well the newsflow is certainly hotting up in the sector, thats for sure.

I thnk the reaction with SQZ is a bit weaker than might have been the case since it has caught everyone on the hop, though I see its up 2% in Canada.

Oil is very nice indeed but of course the RNs is a bit "empty" on anythign more significant. I guess a trip to the AGM is going to be in order if nothing much else appears over the coming days.

As to the site, Im glad you like it. Already feeling more like home than TMF. Sad to see but thats progress - or lack of. Its nice to be in at the groundfloor and able to help the Stockopedia guys design a format and site we want.

Actually looking again at the slides 24 & 25 referring to Bandon on Serica's recent OilBarrel presentation here http://www.oilbarrel.com/fileadmin/content/pdfs/oilbarrel/presentations/Seri%20pres.pdf , there is a reference to potential oil source in the Jurassic.

The delay in the well result is now explained by the sidetrack. Presumably what they found must have been significant enough to make this worthwhile.

Hi Darren,

Will you be going to the SOCO AGM tomorrow or are you going to the AEX meeting in Dublin? It is a shame that they are both on the same day. I have decided to go to the SOCO AGM in London tomorrow and then the AEX briefing in London on Thursday.

All we need now is an announcement from GBP and TRP that they have discovered oil in abundance. It would complete a very nice hat trick.

I am going to have to go out for a walk to calm down. The excitement is proving too much.

Best wishes,

In reply to Norman115 (post #7)

Dublin for me Norman.

Not only is the Guinness better but its also a heck of a lot cheaper than London (£10.86 for the flight).

Mind you, I will miss Isaac and ee's deathmatch....

Sorry for the OT

emptyend

In reply to djpreston (post #8)

.......mmmmmm......it would be a nice start if someone could introduce himself rather than sneaking in and then scuttling off!!

Given Brian my regards in Dublin.

Re SQZ you may be in the right place to pick up some gossip. Finds in Irish waters (albeit of uncertain size) aren't that common - and I'd think there may be other potential beneficiaries as well as Serica.

Isaac

This comment has been moderated

madmix

Updated Tristone note here : http://tinyurl.com/km6cjj

They have now valued Bandon at 17.5p risked @ 50%, or 35p unrisked based on 50mmboe.

Total RENAV 134p.

I thought about top slicing a few at 75p today following the limited info in the RNS. However, on reflection it seems probable that Serica don't want to give too much away at this stage given the open acreage in the surrounding area. With the downside largely underpinned by Kambuna & Columbus, and decent upside potential from the other Irish prospects, I'm happy to hold on tight at these levels.

SW10Chap

In reply to doverbeach (post #6)

I haven't been following Serica and someone has asked me for my thoughts on this.

What's the background?

AIUI, although Serica have announced an oil find in their recent RNS they were targetting gas. Now, they've obviously got all the data and as far as I know we only have page 25 of the OilBarrel presentation to look at.

Why did they expect gas?

Well, it's easy for me to be a smarty-pants after the event. Nevertheless, taken at face value, it would seem a little odd to me that they would have expected gas to gather in the Sherwood sand anomaly they've identified; based on the single two-dimensional slice we have here, I would expect the Zechstein Halite (marked in pink) to seal the Westphalian source rock. In other words, the Zechstein salts would prevent any migration - bear in mind they cap much of the Southern North Sea reservoirs. It may that they had modelled in some faulting that would have allowed this to happen.

Could we have expected oil to be there?

That slide also shows the Lower Jurassic (in light blue) to be the oil source rock and that well 27/5-1 to the east encountered oil shows in the Middle Jurassic. But (assuming the seismic interpretation to be reasonably accurate) 27/5-1 exhibits some fairly straightforward stratigraphy whereas Brandon is situated nearby a deep syncline which is associated with some faulting. A model is not apparent to me from the section on page 25 of the presentation, but with some imagination it's feasible to imagine that oil has migrated from the Lower Jurassic source rock and 'up' into the Sherwood sandstone (although this is, as it were, 'down' geologically-speaking.) Interestingly, this would mean that the oil has traversed - or bypassed - what I assume to be its ultimate caprock, the Mercia Mudstone.

What are the implications?

Let's turn to the RNS for a moment:

Oil was encountered and a sidetrack was drilled to acquire additional data and samples.

I can't really understand why they would have needed a sidetrack. Ok, so everyone was a bit shocked and the geology bods got a bit of a reaming, but why sidetrack? All the data and samples they needed could have been obtained from the original well. It's not as if a sidetrack was going to show anything new unless they really believed they were right on the shoulder of something. And if they were wedded to their model, perhaps what they hoped for.

The volume of oil in place cannot yet be estimated with certainty as considerable technical work remains to be done

Or, put another way: "The entire premise upon which we drilled the well has turned out to be wrong, and so we'll need to revisit our seismic interpretation, our models and all our data to try and establish what the hell is going on. What's worse, we didn't have any of the kit on board needed to test for oil"

This is the first oil discovery west of Ireland for nearly 30 years.

? "No-one is more surprised than me"

Although much more work needs to be done before the commercial potential of the discovery and the rest of the licence can be established

? "You won't be hearing much from us on this for quite a few months"

the Bandon oil discovery could mark the beginning of an exciting phase of Irish exploration.

I'd cautiously note the word could here, and he's right. I'd guess that they didn't have the kit to do any proper testing or analysis, and it may be just some limited shows they've encountered, perhaps oil migrating through a fault.

As I say, I haven't followed the SQZ story, and as such I think the key phrase I'd bear in mind is "much more work needs to be done before the commercial potential of the discovery and the rest of the licence can be established"

Good luck.

SW10

AbAngus

10th Jun '09

SW10 Chap - many thanks indeed for your erudite summary.

Please excuse two ignoramus questions. (I know more about artificial insemination in cattle... perhaps we should use seismic...)

1. Might the AVO signature have misled SQZ into thinking it was gas?

2. Might they have drilled the sidetrack to make sure that they hadn't just drilled into a small oil migration through a fault or somesuch?

Have fun,

In reply to AbAngus (post #13)

There are a lot of different considerations which would be used in the modelling and interpretation and I doubt they would have relied on one - I imagine there would have been a suite of factors that led them that way. I do wonder if they were perhaps led by their assumptions. Seismic is not my specialist subject - rather like the exchange student who understands enough to get by, but not enough to hold a fluent and in-depth conversation!

I alluded to that in my post when I said "It's not as if a sidetrack was going to show anything new unless they really believed they were right on the shoulder of something. And if they were wedded to their model, perhaps what they hoped for." if that was the case, then I think it was a bit of a panicky reaction.

SW10 Chap - Many thanks!

oilretire

18th Jun '09

In reply to SW10Chap (post #12)

What's worse, we didn't have any of the kit on board needed to test for oil"

Just a small point, they did not plan to test this well, even if they did find gas. Not sure if it was logistics or costs or both that led to this plan.

In reply to oilretire (post #16)

As I understood it not having testing equipment was a cost issue

25th Jun '09

I will be doing a seperate AGM write-up, but for the purposes of this thread:

everyone was of course on best behaviour and very tight-lipped about what they discovered
the two reasons for being so secretive are (a) that until they analyse the samples etc they really don't know and (b) Ireland is highly likely to be holding a licensing round in the near future and all the surrounding acreage is open
there was no sign of gas. The sidetrack was to investigate the oil discovery further and get more information on that, not look harder for gas.
the drilling season is May-Oct. ideally they want to get a site survey done this year if they are to re-drill Bandon next year looking for oil. They already have a site survey done on Boyne, so if they decide not to re-drill Bandon or don't make the decision in time, then it is likely that Boyne will be drilled instead next year.
because of the low Irish tax take, comparatively small amounts of oil may be commercial. 25mmb possibly? or even a bit less?

Bandon Success

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Djpreston

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