Oil & Gas Corporate News
Gulf Keystone (BUY, £2.00) (GKP, 186.5p, ? (3.61%)) reported that MOL Hungarian Oil and Gas plc submitted a Discovery Report on the Bijell-1 exploration well to the Ministry of Natural Resources of the Kurdistan Region of Iraq. As previously announced, 3,743 b/d of 13oAPI oil and 618,826scf/d gas was produced through 48/64" choke from the Bijell-1 well in an interval of 3,729-3,967m during the joint cased hole test. This level might be significantly increased by application of artificial lifting systems. Based on the updated geological model of the accumulation, the calculated petroleum initially in place (PIIP) at P50 is 2,419mmboe in the Jurassic formations of the Bijell structure. This Discovery Report will serve as a basis for the planning of the appraisal program of the Bijell structure.
Comment: Good result confirming the resources potential of the Akri Bijeel block. We have been using 2,400mmbbl oil in place with a recovery factor of 25%, i.e. 600mmbbl recoverable resources for the whole of the Akri Bijeel block in our risked valuation of Gulf Keystone of 225p or so. The recovery is admittedly somewhat higher than could be expected from such heavy oil; however, the shortfall to our recoverable resource estimate of 600mmbbl can be compensated for by the risked expectation of two additional structures present in the block. Hence there is no need to change our assumptions and we feel our risked valuation and target price are still very well underpinned.
Desire Petroleum (LON:DES) (BUY, £1.50) (DES, 72p, ? (45.97%)) and partner Rockhopper Exploration (BUY, £5.00) (RKH, 312.5p, ? (9.09%)) provided the following update on the latest logging results from the 14/15-2 Rachel North well which, following additional wireline data, will be plugged and abandoned with oil shows . As announced on 3 December 2010 preliminary results from the interpretation of the initial log data indicated that the well had encountered a 349m gross interval of sands and shales with hydrocarbons, of which 57m was net pay in multiple zones. However sampling of the main sand has shown that the hydrocarbons are residual and that the mobile fluid is water. Analysis of the formation water recovered by sampling indicates much lower salinity than anticipated and when this value is incorporated into a revised log interpretation it is confirmed that the sands are water bearing. Formation pressures and sampling…
