Ugandan drilling

Friday, May 08 2009 by
2

NO TA ON THIS THREAD PLEASE

Some of you will be familiar with a post I recently made elsewhere on this topic. Global and Tower (TRP) are partners on a drilling campaign in Uganda, the first well of which is due to spud in the next 10 days. The terms of the agreement between Tower and Global are given in this link: http://www.investegate.co.uk/Article.aspx?id=200812220700085588K

and the rig deal is confirmed here:

http://www.investegate.co.uk/Article.aspx?id=200904080700093265Q

Some sources elsewhere have claimed that the rig is indeed already on site as planned, but I have no way of confirming that. [Edit: 14/5/09 - the comparison of TRP with GBP below is now even more in favour of GBP, as the shares are today at 12p compared to TRP at 5.875p. 

 Edit(2): 29/5/09 The well spudded last night. This morning the comparison is STILL even more massively in favour of GBP, as the shares stand at 13.25p compared to TRP at 7.625p. Volumes in TRP in London are running at about 5 times the volume (by value) of trades in GBP, indicating that (even including Aussie trading) the market remains over-focussed on TRP, despite the fact that the upside for each company is more or less identical - but the potential returns for shareholders are MUCH greater in GBP. Reworking the figures below for yourself will show you exactly what I mean!]

In sum, therefore, Global have the right to earn a 50% onterest in the EA5 Uganda block by paying for the first two wells (on the Iti and Sambia prospects, both of which are estimated at c. 100mn bbls in size). And they have an option to stop after only the first well and still retain a 25% interest.

The market appears to believe (due to the focus on Tower in publicity over the drilling) that Tower (TRP) is the only way to play the Ugandan drilling, but it is clear that one gets a very much bigger bang for one's buck by buying GBP instead. I lay out the reasons for this below:

Tower: have over 657mn shares out, currently at 5.75p mid = market cap £37.8mn
Global: have nearly 175mn shares out, currently at 13.25p mid = market cap £23.2mn

Less cash after 1 well:
TRP (guess) GBP 1.2mn ....so EV= £36.6mn
GBP AUD 26.27mn* = GBP 13.21mn (@1.988)...... so EV= £10.0mn

nb.....GBP cash figures…

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Global Petroleum Limited is an Australia-based oil and gas, upstream exploration company, which focuses on Africa and the Mediterranean. The principal activities of the Company consist of oil and gas exploration, development and production. The Company's principal assets are two exploration blocks located offshore Namibia. The Company's project includes Namibian Project. The Namibian Project holds interest in petroleum exploration license number 29 (License) covering Offshore Blocks 1910B and 2010A in the Republic of Namibia. The License covers approximately 11,730 square kilometers and it is located offshore Namibia in water depths ranging from 1,300 meters to 3,000 meters. It intends to seek license positions in frontier exploration areas in Africa and the Mediterranean, and potentially other frontier basins, either directly through license rounds, joint venture arrangements or acquisition. Its subsidiaries include Global Petroleum UK Limited and Jupiter Petroleum Limited. more »

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113 Posts on this Thread show/hide all

emptyend 10th Nov '09 94 of 113
1

In reply to oilretire (post #93)

...worth noting also that GBP ended up 11% (1.5 cents) in Aussie trading....

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REO100 18th Dec '09 95 of 113
3

Rig contract signed and still confident on spud at the beginning of Feb.

http://www.investegate.co.uk/article.aspx?id=200912181230003883E&fe=1

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doverbeach 28th Jan '10 96 of 113
1

Now expected to spud Feb 12, as rig delayed a bit http://www.investegate.co.uk/Article.aspx?id=201001280705002420G

db

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ohisay 14th Feb '10 98 of 113

In reply to oilretire (post #97)

Can't see news being more than 10 to 14 days given the 2 shallow target depths and the evident information leakiness from their last attempt at ITI.

The madness of crowds will certainly be evident on Advfn ,iii and lse.!

 

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emptyend 14th Feb '10 99 of 113

In reply to oilretire (post #97)

Can't recall any prospect size info here. Does anyone have some numbers?

ee

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oilretire 15th Feb '10 100 of 113
3

In reply to emptyend (post #99)

http://www.edisoninvestmentresearch.co.uk/research/category/tower-resources

Tower is planning a new Albertine exploration well in February 2010 with the potential for a 100mm barrel discovery. A 30mm barrel discovery would, however, be commercial.

Need to log in for the rest of the note......... which I can't remember just now, time for bed I think!

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Argus 22nd Feb '10 101 of 113

What happened around 13:00 that I've obviously missed?

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rhomboid 22nd Feb '10 102 of 113

In reply to Argus (post #101)

whatever it was also happened to Tower, let's hope it's well founded!

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Fangorn 22nd Feb '10 103 of 113

Call me a cynic but it looks like some info has leaked somwhere.

Didn't they spud Aviva-1 2 weeks or so ago, and further news on this well is imminent?

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ohisay 22nd Feb '10 104 of 113
2

In reply to Fangorn (post #103)

The truth of it is that one character with his own website was posting the usual ramptastic stuff about oil shows being found and everybody and his dog fastened onto  it .

Its part of the investing landscape of course with small oilers .I'm not going to dignify it by posting a link but thats why IMO there was the madness of crowds after 1pm.

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Fangorn 23rd Feb '10 105 of 113

Seems the madness is ongoing this morning as well! :)

Thanks for the colour, appreciated.

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oilretire 23rd Feb '10 106 of 113
2

Trading halt in Oz. News very soon then. Can't determine if it's good or bad from that though.......

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poobear 24th Feb '10 107 of 113

Trading halt in Oz pending news from Aivi-1 on Friday.

http://www.asx.com.au/asxpdf/20100224/pdf/31nwcqg3c3gbs9.pdf

They are using the rig and crew that have experience from the start for Heritage and Tullow, seems to me they could have made better progress than that made at Iti-1 with a novice crew from Poland on their first job using a rig from the back of a Scud Missile launcher  iirc.

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oilretire 24th Feb '10 108 of 113
2

Poo, trading halt in Oz for 48hrs seems to be standard issue.
They will get the bad news tonight.
TD with no oil shows :-(

No link as via phone

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doverbeach 24th Feb '10 109 of 113
3

Tower Resources plc (AIM: TRP) wishes to advise that Avivi-1 has reached its total depth at 764 metres without experiencing oil shows - basement was penetrated at 742 metres. Electric logging operations are underway and a full statement will be released once these have been completed.

http://www.investegate.co.uk/Article.aspx?id=201002240700085783H

GBP now down to 7-7.25p which is pretty much their cash level, so that should be a floor. TRP down 70%.

db

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emptyend 23rd Mar '10 110 of 113
4

Tower announcement this morning:

Tower Resources plc announces that its wholly owned subsidiary Neptune Petroleum (Uganda) Limited, has applied to the Minister of Energy and Mineral Development, the Government of Uganda, to continue exploration of Licence EA5 into the Third Exploration Period. This period extends from March 27th 2010 until March 26th 2012. The forward programme will comprise geophysical activity as the next stage of operations, followed by a further exploration well, and this work programme together with relinquishment obligations are being discussed with government technical specialists. Agreement to proceed with the exploration programme is expected soon.

The Tower Board has concluded that the information from the first two exploration wells on EA5 demonstrates considerable exploration potential still exists in the Licence.....

Avivi-1 encountered thick sequences of organic rich sediments which are likely to represent good mature source rocks in the deeper areas of the basin. The thick clays should also provide very effective trap sealing properties. Wireline logs and water samples demonstrate that the Avivi structure is water bearing but mid-mature oil was entrained in the sampled water confirming that oil has been generated in the Licence and is currently migrating. The composition of this oil is similar to that of oil recovered from Iti-1 and surface oil samples. Pressure data from Avivi-1, when combined with pressure data from Iti-1, is consistent with a possible oil accumulation at Iti-1 in low permeability reservoir sand. The uncertainty related to generation and migration of oil in the Rhino Camp Basin has, therefore, been significantly de-risked.

 The lack of good quality reservoir at either well location increases the emphasis on identifying structures in the deepest area of the basin, where the chances of encountering better reservoir are improved. This can only be achieved by substantially increasing seismic coverage in the areas of greatest interest, which will be addressed in the forward work programme.

Most of the funding for the programme in the Third Exploration Period is expected to come from third parties and the Board is confident that this can be achieved.

Presumably the GBP will reach a similar conclusion - and at least stay in for the 25%. Certainly TRP seem more bullish on the acreage than I might have expected, given the relative lack of success - but then I guess there is enough there to be pretty sure there is oil there somewhere.....its just a question of finding it!

From a GBP perspective, one hopes that they don't take a bigger share in the farmout.....though I must say that I'm starting to struggle to understand why they don't simply merge GBP and TRP if they are going to continue to run GBP as a cash-rich, one-asset company. Surely it would be better for both to put the two together (or do some other deal)?

ee

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REO100 25th Jun '10 111 of 113
3

Uganda update, option of 25% maintained but no ongoing costs - detail below.

http://www.investegate.co.uk/Article.aspx?id=201006250909492406O

Can't see a problem with that, it seems a reasonable position to be in, considering the first two drills have not been commercial.  However, it does leave the question of the company's plans with the current cash pile and the recent director buys.  For the ordinary PI this company is very difficult to second guess and the website is still shall we just say needs a facelift !

Reo

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emptyend 9th Dec '10 112 of 113
4

Worth noting the TRP release this morning:

Uganda

Final interpretation studies of the aero gravity gradiometry survey (GGI) over Licence EA5 are complete, together with an updated interpretation of the basin supported by detailed analyses of all well data. The results are positive (see attachments) in demonstrating the probable existence of an active oil generation kitchen as indicated by the widespread presence of near mature oil encountered as micro seeps close to surface and as trace amounts in the water samples picked  in the two wells. The GGI has also identified an apparently closed structural feature having an area greater than 100 square kilometres, in a location where basin modelling projects that good quality reservoir should be present. The limited sections of existing seismic coverage here show that the prospective reservoir interval maintains its thickness over the structure, in contrast with the setting of the recent wells, both of which were drilled where the reservoir interval was thinning on to the structurally high points of the prospects.

 

Sedimentological studies confirm that both wells were probably marginal to the main fluvial deposition region early in the basin history. Scanning Electron Microscope and X-Ray Diffraction observations have shown that high porosity sandstones have had pore throats choked by detrital clay. Formation fluid data samples from Avivi-1 have allowed a much improved interpretation of electric log and wireline pressure data at Iti-1. A mobile oil phase in Iti-1 still remains a possibility with calculated oil saturation between 15% and 35%. This would be consistent with oil in a reservoir having low effective porosity and permeability.

 

In summary, there is an improved likelihood that there is a large structurally high area, suitably placed to contain good quality reservoirs, on a probable direct migration path from a significant hydrocarbon generating kitchen. This structural area is expected to have a number of discrete closed prospects and one of these is expected to be the target for a third well. All of the outstanding questions about the Licence now have a plausible explanation. The quality of the GGI interpretation now points to a focused seismic survey targeted at the newly defined structural high and its surrounding area. A seismic programme of 150-200 kms is now being planned with targeted timing of an April 2011 start and duration of about one month.

 

All of the information required by potential farm in partners is now available. A final phase of the farm out programme has now begun and the next two months will determine current third party interest in funding the remainder of the Uganda commitment operation. Several companies have continued to express an interest, contingent on receipt of the updated technical information.

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tournesol 9th Dec '10 113 of 113
1

off topic I know but am I the only person who reads the thread title and thinks of Private Eye's (in)famous euphemism?

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