A thread to cover all things relating to NW Gemsa in particular.
Premier have announced the sale of their 10% interest in NW Gemsa to Sea Dragon Energy for $12.5m:
http://www.investegate.co.uk/Article.aspx?id=200908191400016982X
COP has a 40% interest so that equates to $50m or £30m at $1.64:£.
Roll on the overdue result on the latest appraisal well.
Hi DJ
Looking at the Fox Davis research note out recently here http://www.fox-davies.com/media/53103/circle%20oil%20update%20july%2009.pdf on page 8 table 2 "NW Gemsa valuation" they have a risked valuation of 173M for COP's 40% interest.
Have I got somthing wrong or does this also ring alarm bells with you. Fox Davies were bullis on COP of course.
Log
appraisal well successful: http://www.investegate.co.uk/Article.aspx?id=200908250700049112X
the well tested 40° API oil and gas in the Kareem Shagar Formation at a sustained average rate from 35 feet net pay of 2,395 bopd and 2.2 MMscfd using a 32/64' choke. Short term testing achieved a rate of 4,938 standard bopd and 8MMscfd with a 64/64'choke.
A full technical evaluation of all the results is underway to further assess the resource and to permit development planning. An assessment of reserves has not yet been completed. The well was completed as a potential producer with the testing being carried out once the rig, Mubarak-1, moved to commence drilling the Al Amir SE-4 appraisal well.
db
In reply to doverbeach (post #3)
A good result.
Initial comment is that the flow was better than expected but crucially this was a test of an extension of the field across a fault and downdip towards the NE. The net pay seems to be in line with expectations and as Ive said, flow rates were better than Al-Amir SE1.
Assessment of reserves is the next bit of news we really need to see. In the meantime progressing on with the appraisals, the next being a higher risk well as mentioned in the RNS.
Slow off the ball today (had to take no 2 son for his first day at school today - sob!)
Anyway, a nice update on production from the company:
http://www.investegate.co.uk/Article.aspx?id=200909020700043547Y
Selected excepts:
Circle is also delighted to confirm that average gross daily oil production from the four producing wells* on the NW Gemsa Concession has now reached approximately 4,300 - 4,350 bopd following an initial
production period from the two new wells.
'We are obviously delighted with the successful tie-in of these two additional producing wells on our NW Gemsa interest, which effectively doubles Circle's Egyptian oil production. We look forward to further increases in production from our continuing appraisal and development drilling programme in the region
including bringing the Al-Amir 1 heavy oil discovery into production.
'In Morocco, we are working to increase our gas production volumes from the present 70,000 cubic metres per day with 4 discovery wells remaining to be brought into production.'
And of course the Al-Amir SE4 appraisal is still drilling ahead and so news due form that in the not so distant.
Given the 40% COP interest, cashflow is building very nicely indeed with an almost constant newsflow re new wells and hopefully a new project or two....
RNS from COP giving their update on Al Amir SE4
Interesting to note that they still quote PMO as a 10% interest (Seadragon not yet completed uts purchase?)
Extract:
Circle is delighted to confirm that the Kareem Formation (the "Formation")
sandstones under test flowed 42 API oil and gas at sustained average rates of
5,500 bopd and 7.159 MMscfd using a 64/64" choke from the lower of two
identified pay zones. The well, which is the third appraisal well to be drilled
on the Al-Amir SE discovery area, has been completed, connected into the local
infrastructure and is in production.
Log result based interpretations indicate that the total net thickness of the
two pay zones is approximately 69 feet. The upper pay zone identified in the
Kareem Shagar Sandstone is 23 feet thick and will be tested at a later date. The
lower tested pay zone in the Kareem Rahmi Sandstone is 46 feet thick.
A full technical evaluation of all the results is underway to permit development
planning and is a precursor to further assessment of the resource potential. An
assessment of reserves has not yet been completed.
David Hough, CEO of Circle, said:
"This successful appraisal well, which has given the best results to date in the
Al-Amir discovery area and will add to our current production, is yet more
excellent news for Circle Oil. Al-Amir SE-4X has gone into production and we
will achieve stabilized production from the well as quickly as possible. We can
be justifiably very pleased with the results of our ongoing drilling programme
as these drilling successes further strengthen the Company's position and we
look forward to the continuing appraisal of these growing assets.
(I see SW10 beat me to it on the other thread)
Note out from Fox Davies on well result: http://www.fox-davies.com/media/84956/fdccircleoctober27th2009.pdf
Their conclusion:
This is excellent news and these results are the best so far achieved in Al Amir. In
the next 12 months or so, the continued drilling campaign should enable the
Company to reach its target of 11,000bopd of gross production from the NW
Gemsa concession.
Next up:
The Al-Amir test programme began once the drilling rig moved [nb I assume this should read "will continue when the drilling rig has moved"] to the north and commenced drilling the Geyad 2 well which is the first appraisal well in the Geyad discovery area. The primary target will again be the Kareem Formation and it is planned also to test for secondary targets in the Pre-Miocene Nubia sandstones prognosed at a depth of 11-12,000 feet.
Recommendation:
With much of the value still to be realised and good catalysts going forward, we
continue to be positive on the stock and maintain our price target of 72p.
db (bought a few last week)
Brief note out from Fox Davis on yesterday's RNS :
From the RNS :
Al-Amir SE-6X down-dip flank appraisal well has completed coring and logging the oil-bearing Upper Shagar and Lower Rahmi Kareem Sandstones and has now reached a target depth of 13,900ft in the Lower Rudeis.
Whilst drilling toward the secondary deeper objective of the Nubia Sandstones, some significant gas shows were recorded and for the safety of well integrity, it was decided to terminate the drilling of the well in the Lower Rudeis and run a 5" liner. Testing of the well is now planned. Once the well is tested and evaluated, a further announcement concerning the results of the well will be made.
Presumably the coring & logging and now testing means that they have found some hydrcarbons. It doesn't mention whether they have found the oil-water contact - the F-D note however says that they have not. Whether this is reading between the lines of the RNS or guesswork or they have been told this by the company, I don't know. But assuming it is true, then it's good news for COP as the potential field size gets larger rather than smaller :)
From the F-D note:
Both Al Amir SE-5 and -6 wells were drilled with a specific objective to locate the oilwater
contact in order to delineate the extent of the Al Amir SE field and come up
with definitive recoverable resources estimates. The wells failed to encounter the
elusive contact which is rather good news for the Companies involved insofar as,
having established deeper oil down-to levels, the size of the field is larger than
initially expected and, until a definite contact level is established, there is no certainty
as to how large it could be.
The combination of a deeper oil down-to and thickening reservoir with depth
compound the increase in STOIIP versus initial expectations.
F-D have maintained their 12 month price target of 90p.
db
Here is the update from Sea Dragon, adds a little detail on size of pay being evaluated:
"The Al Amir SE #6 well has now reached a depth of 13,900ft in the Lower Rudeis Formation. The primary targets, the two oil bearing sands in the Kareem Formation were cored and logged. Petrophysical evaluation indicate 30 ft of pay in the Upper Shagar sand and 24 ft of pay in the lower Rahmi sand. While drilling in the Lower Rudeis Formation significant gas readings were encountered over a large section, requiring the operator to increase the mud weight to stop the well from flowing. Due to safety concerns, drilling operations were terminated before reaching the Nubia zone. The plan is to case the well and test all hydrocarbon zones. Significant hydrocarbon shows in the Lower Rudeis are indicative of the presence of a trap that could also contain the secondary target being the prolific Nubia sands. Testing the Nubia will now require engineering and drilling of a new well."
http://www.seadragon.ca/news/2010-05-26%20Operational%20Update.pdf
As per usual, Sea Dragon has jumped the gun and put out the latest update on NW Gemsa for the El Amir SE6 well
Extract:
The Al Amir SE#6 well has reached its final depth of 13,900 ft. in the Lower Rudeis Formation. The well was logged, cased and is currently undergoing completion and testing operations. The primary targets being the Upper Shagar and Lower Rahmi sands in the Kareem Formation were found oil bearing with net pays of 30 feet and 24 feet respectively. Additionally, Petrophysical analysis of the deeper Lower Rudeis Formation shows an 8 foot net pay section and a substantial amount of gas, which will be perforated and flow tested for pressures and fluid content. This will provide further analysis to determine if the Nubia sands have hydrocarbon potential and if another well is merited to drill down to the Nubia zone.
As reported earlier, once testing operations are completed in the Lower Rudeis Formation, the well is planned to be plugged back and completed in the Kareem Shagar formation as an additional producer.
