African Petroleum releases quarter ended 31 December 2012 report

African Petroleum releases quarter ended 31 December 2012 report

HIGHLIGHTS
CORPORATE
– Approximately US$52.6 million cash at bank at 31 December 2012
– In addition, approximately US$72.5 million restricted cash at 31 December 2012: US$50.0 million as security for the Ocean Rig drilling contract; and US$22.5 million being security deposits that will be released upon the achievement of certain drilling milestones in Cote d’Ivoire
OPERATIONS
– Post quarter end, the Company commenced its two well drilling programme in Block LB-09, offshore Liberia,drilling the Bee Eater-1 well with the Eirik Raude semi-submersible drilling rig
– New business opportunities continue to be reviewed offshore West Africa
African Petroleum (through wholly owned subsidiary European Hydrocarbons) holds a 100% interest in Blocks LB-08 and LB-09 offshore Liberia (Liberian Licence Blocks).
African Petroleum completed the acquisition of 5,100 sq km of 3D seismic over the Liberian Licence Blocks in mid 2010. Seismic interpretation revealed an extensive submarine fan system, similar to those containing the Jubilee Field in Ghana, and the Jupiter, Mercury, Venus discoveries in Sierra Leone. The evaluation of the 3D seismic data identified more than 40 similar prospects and leads in the Upper Cretaceous section.
African Petroleum’s first well (Apalis-1) on Block LB-09, was completed in September 2011. Apalis-1 was drilled to a depth of 3,665 metres and encountered oil shows and source rocks. The results of Apalis-1 confirmed the critical components of a working hydrocarbon system.
The Company’s second well on Block LB-09, Narina-1, was spudded in January 2012. The well was drilled to a total depth of 4,850 metres in a water depth of 1,143 metres. Narina-1 found a total of 32 metres (105 feet) of net oil pay in two zones: 21 metres (69 feet) in the Turonian; and 11 metres (36 feet) in the Albian. Good quality oil was found in each the Turonian and the Albian reservoirs of 37 degrees API and 44 degrees API, respectively.
Hydrocarbon shows were encountered over a 170 metre interval in the Turonian and no oil water contact was found. The Narina discovery confirms the prospectivity of these highly successful West African exploration plays on the Liberia Licence Blocks.
After extensive post-well evaluation, the Company commenced drilling the Bee Eater-1 well on block LB-09 on 4 January 2013 with Ocean Rig UDW Inc.’s 5th generation deepwater semi-submersible drilling rig, the Eirik Raude.
The Bee Eater-1 well is located 9.5km north west of the Narina discovery. The Bee Eater-1 well will test a potentially westerly extension of the Narina-1 Turonian oil discovery in an axial position of the fan for improved reservoir quality and is located up dip of the postulated Narina-1 OWC. Mean recoverable unrisked prospective resources for the Bee Eater/Narina fan system, which extends over an area of 300 km sq, have been estimated as 840 MMstb. Additional prospects identified on LB-08 and LB0-09 have a total estimated mean recoverable unrisked prospective resources of 2396 MMstb. (Source: ERC Equipoise Limited independent report
“Prospective Resources for Liberia Blocks LB-08 and LB-09”, January 2013).
The second well in this drilling programme is planned to be drilled with the Eirik Raude in Liberia following on immediately after completion of the Bee Eater-1 well. A number of potential well locations in Blocks LB-08 and LB-09 are under consideration, dependant on the outcome of the Bee Eater-1 well.
Cote d’Ivoire Project: Blocks CI-509 & CI-513
African Petroleum Cote D’Ivoire Limited holds a 90% operating interest in exploration Blocks CI-509 and CI-513 offshore western Cote d’Ivoire, the remaining 10% carried interest is held by Petroci (the national oil company of Cote d’Ivoire). Block CI-509 covers 1,091 sq km and Block CI-509 covers 1,440 sq km, with a combined surface area of 2,531 sq km.
African Petroleum contracted BGP Marine (Prospector PTE Ltd) for the acquisition of a 4,200 sq km 3D seismic survey over Blocks CI-513, CI-509 and CI-508. The acquisition commenced in April 2012, using the 12-streamer vessel “BGP Prospector”. The vessel continued directly onto the CI-508 & CI-509 survey, which was completed, on 9 October 2012. The CI-508 survey was acquired by African Petroleum on behalf of Vitol and partners, and the acquisition and processing is subject to a cost sharing agreement. The fast-track 3D data was received in November 2012, and is currently being interpreted. Final 3D seismic processing for the entire survey will be completed by May 2013.
The Company will again focus on targeting deepwater Upper Cretaceous submarine fans in Cote d’Ivoire which are considered to have similar high impact potential as discoveries in the Jubilee Field. The existing 2D seismic dataset shows encouraging leads and prospects over the two blocks, and the recent discoveries at Paon-1 (Tullow Oil plc, June 2012) and Independance-1 (Lukoil, December 2011), has confirmed the viability of the play in western Cote D’Ivoire. The initial fast-track data has confirmed the presence of major turbidite fan systems.
The Company currently plans to drill one well on each Block (Block CI-513 and CI-509) in late 2013 or early 2014.
Sierra Leone Project: Blocks SL-03 & SL-4A-10
African Petroleum holds a 100% interest in Blocks SL-03 and SL-4A-10, offshore Sierra Leone. Block SL-03 is 3,860 sq km in area and SL-4A-10 is a 1,995 sq km area, both situated to the north west of Anadarko’s recent Jupiter, Mercury and Venus discoveries.
SL-03 was awarded to the Company in February 2011. The acquisition of 2,535 sq km of 3D seismic data in Block SL-03 was completed by TGS-Nopec in September 2011. The fast track 3D volume was received in January 2012 for interpretation and an initial prospectivity assessment has been completed. The Company have identified Turonian to Campanian-aged prospective channel systems, located 70-100 km west of the Jupiter, Mercury and Venus discoveries. The promising prospects will be verified on the final 3D data, which was received in the fourth quarter 2012. The Company expects to be ready to drill a prospect in Block SL-03 in early 2014.
The Company was awarded Block SL-4A-10, offshore Sierra Leone, as part of Sierra Leone’s third offshore licensing round in 2012. The award was formally ratified by the Parliament of the Republic of Sierra Leone in September 2012. The Company has already identified a number of promising prospects for verification on the 2D seismic data. Multi-client 3D seismic data was acquired by TGS-Nopec over part of block SL-4A-10 in October 2011, and this will shortly be licensed by the Company.
Gambian Project: Blocks A1 and A4
African Petroleum Gambia Limited has a 60% operating interest in Blocks A1 and A4, offshore The Gambia (Gambian Licence Blocks), acquired via a farm-in agreement with Buried Hill Gambia BV. The Gambian Licence Blocks cover a combined total area of 2,668 sq km.
The Company completed the acquisition of 2,500 sq km of 3D data in relation to the Gambian Licence Blocks in December 2010. Processed 3D seismic data was received in June 2011 and interpretation is ongoing.
More than 30 exploration prospects and leads have been identified on the Gambian Licence Blocks, including five different play types. The four way dip closed Alhamdullilah structure has been confirmed, which extends over an area of 24 sq km with five mapped reservoirs and a gross thickness of 1,000m. There are potential mean unrisked recoverable prospective undiscovered resources of approximately 500 million barrels (Source: ERC Equipoise independent review of African Petroleum resource, April 2011).
Other play types in the Gambian Licence Blocks include stratigraphically-trapped fans and slope channel complexes of Turonian-Campanian age, Upper Jurassic and lower Cretaceous karstified reef build-ups and fourway closures and eroded shelf clastics onlapping the shelf edge.
Following the acquisition of the 3D seismic data, detailed mapping of the Alhamdullilah prospect has been completed, targeting a series of stacked submarine fan complexes. A well location has been agreed and the Company has advanced the well planning. The Company plans to drill in 2,300m of water depth and target multiple reservoirs within structural closure, to a target depth of 6,300 m. The drilling of the Alhamdullilah prospect will be the first deepwater well in the Senegal-Gambia offshore region. The Company is now planning to drill the first well in The Gambia during the second half of 2013.
Senegal Project: Rufisque Offshore Profond and Senegal Offshore Sud Profond
African Petroleum Senegal Limited holds a 90% operating interest in exploration Blocks Rufisque Offshore Profond and Senegal Offshore Sud Profond (the Senegal Blocks), offshore southern and central Senegal covering a total surface area of 18,277 sq km. The remaining 10% carried interest is held by Petrosen (the national oil company of Senegal).
The Company has licensed over 10,000km of 2D seismic data over the Senegal Blocks to compile an extensive regional database. In May 2012, Dolphin Geophysical completed a 3,600 sq km 3D seismic survey over Senegal Offshore Sud Profond. Fast-track data was received in July 2012, and initial prospects and leads have been identified. Final 3D seismic processing is due for delivery in March 2013. The Company is currently reprocessing 2D and 3D seismic data acquired by the previous operator over Rufisque Offshore Profond, with delivery expected in March 2013. The Company hopes to be in a position to drill a well in Senegal during 2014.
SOURCE: African Petroleum
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