Morocco the hot new province for oil
A host of explorers large and small will be poking holes in the seabed over the next couple of years – something that Esso started to do back in the 1960’s before it was understandably distracted by some highly successful hits in Bass Strait and the North Sea.
“There is nowhere in the world that I know of that is having this amount of drilling activity at different levels and with various operators,” said Tangiers Petroleum executive chair Ms Eve Howell, an experienced oil executive who worked at Woodside and Apache.
At least 10 wells will be drilled starting later this year and some of the major companies involved include Galp, Total, Cairn, Kosmos, Chevron, Plains and Genel.
It is not hard to see why all of the activity is happening with a very large billion barrel oil discovery off the Canadian coast neatly lining up with Morocco as a “conjugate margin” – a more sophisticated version of cutting out the continents and joining them back together to find similar rocks.
The offshore Cap Juby oil field was discovered in Morocco in the 1960s but the area is still relatively unexplored with only one well drilled for every 10,000 square kilometres compared to the global average of 80.
Only eight wells have been drilled since 2000 so the availability of modern 3D seismic mapping should also greatly improve the selection of likely drill targets and the chances of at least one of the drills encountering some oil.
Tangier’s large Tarfaya field is certainly in there with a chance, being in the same Jurassic carbonates that hosted Cap Juby and with the potential to host up to 867 million barrels of recoverable oil in four reservoirs.
Even with small recovery rates a positive discovery would be a transformational event for Tangiers, which has retained an impressive 25 per cent free carry after the drilling was farmed out to Galp Energia.
Foster Stockbroking used conceptual modelling to estimate that the largest prospect, called Trident, had unrisked upside of around $10.60 a share, which makes the company a spectacular combination of high risk and reward.
Unusually for a small explorer Tangiers is also reasonably well capitalised with more than US$10 million coming its way in cost reimbursements.
Tangiers also owns a couple of interesting gas prospects in the Bonaparte Basin south west of Darwin and it is entitled to 27 per cent of those after another farmout deal.
It goes without saying that offshore oil drilling is a risky business but Tangiers is a worthy speculative buy purely on the basis that there are so many major oil companies jealously looking at its relatively shallow offshore Morocco permits of 11,282 sq kms.
Any oil discovery in the area is sure to give Tangiers shares a kick.
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