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Oil & Gas Corporate News
Ascent Resources (BUY, �0.20) (AST, 7.63p, ? (1.61%)) announced the successful completion of the first phase of the Pg-11 well in the Petisovci Project ('the Project') in Slovenia. The primary objectives of the well have been satisfied with gas confirmed by logs in all of the six Middle Miocene Badenian reservoirs. In addition, gas and condensate were sampled from the Lower Miocene Karpatian reservoir and gas flowed for the first time from the shallowest 'A' sands. The next phase of the operations depends on the analysis of the log and core data and it is planned that the drilling rig will remain on location so a horizontal production sidetrack can be drilled. AST�s Managing Director stated that: �The new data generated from the Pg-11 well supplements the recent 3-D surveys recorded across the whole 200km2 project area and enables us to move forward with the second phase of the well programme focussed on a horizontal production side track. Facilities design studies are now being completed for the redevelopment programme and we believe that there is the potential to commence production within a year�. Also, full sized cores were recovered (18m long) from three of the reservoir intervals and these are now being analysed for a full range of reservoir parameters. Two open hole tests were also run: the first in the shallowest 'A' sand produced a flow of gas estimated to be 600m3 per day (21.2 Mscfd), whilst the second test in the 'D' sand was terminated early with indications that the testing tool had become plugged. Both tests confirmed the expected pressure gradient that ranges from 1.25SG in the shallowest interval to approximately 1.6SG in the deepest 'F' sand. Because of this pressure transition, which reached 1.78SG in the Karpatian, testing of intervals below the 'D' sand were not contemplated and recovery of the test tools after the 'D' sand test proved difficult. Below the 'F' sand, 58m of the Karpatian formation with a higher 1.7 SG pore pressure was drilled and strong gas shows were observed throughout. During circulation after logging, gas from the Karpatian formation was flared and condensate samples were collected. At this time the drill string became stuck and over 1,100m of drill pipe remains in the well. However this will not prevent drilling a horizontal side track. The drilling and log data from the Karpatian formation indicate a naturally fractured and porous formation and a nearby well showed that this formation can be over 200m thick. It is likely that this horizon will contribute to an increase in gas-in-place estimates. Ascent is in discussions regarding the appointment of a specialist technical adviser for tight gas sand developments and has access to the extensive technical resources of EnQuest plc, now a major shareholder in the Company, to optimise the future redevelopment plans for the Project.
Comment: Presence of the naturally fractured and porous Karpathian interval is encouraging and it appears that AST may look to this horizon for near-term production from the horizontal side-tracking of Pg-11. However, at greater depths and pressures, the drilling and completion operations will be more challenging. We understand that RPS� P50 estimate of 412 bcf is for Gas-In-Place volumes and not recoverable reserves; with the data from Pg-11 it may now be possible to estimate recoverable reserves. This is a positive update on the Pg-11 drilling and testing operations; however, there is still more work to be done for further de-risking of the project and achieving commercial production. It is good to read that AST is considering the appointment of a specialist technical adviser and taking advantage of EnQuest�s technical resources.
Max Petroleum (BUY, �0.50) (MXP, 17.75p, ? (2.90%)) announced that it has commenced drilling the ASK-1 exploration well on the Asanketken prospect in Block E, the ninth of 15 post-salt exploration prospects scheduled to be drilled by the Company on Blocks A&E. The total depth of the well will be approximately 3,300 metres, targeting potential Triassic reservoirs.
Tullow Oil (TLW, 1427p, ? (0.90%)) announced that the Gharabi-1 well, located in Block 6 offshore Mauritania, was unsuccessful and has been plugged and abandoned. The well, drilled by the Maersk Deliverer in water depths of 1,787 metres to a total depth of 4,433 metres, intersected poorly developed water-bearing reservoirs. Gharabi-1 was drilled by the Operator Petronas to meet a commitment on the block and the result has no impact on Tullow's future plans for its Mauritanian acreage.
Mining Corporate News
Kalimantan Gold (KLG, 5.75p, ? (4.55%)) announced an update to its option to joint venture the Jelai Gold Project in the Republic of Indonesia with Tigers Realm Minerals Pty Ltd. whereby Tigers Realm may earn up to a 70% interest in the Project. Tigers Realm has completed its due diligence and has executed a definitive option agreement conditional upon the IUP being extended to at least June 2, 2015 and forestry permits being granted as necessary to enable the on ground activities to be conducted. Both the IUP revision and forestry permits are expected to be in hand shortly.
Oilfield Services Corporate News
AEA Technology (Monitored Coverage) (AAT, 4.7p, ? (7.39%)) released a disappointing trading update yesterday stating that 2010/11 results (March yearend) will be at the lower end of market expectations. This reflects a weak European performance and necessary action to reduce costs and strengthen management. The medium term outlook comments remain solid with the US particularly encouraging. Forecasts are likely to be lowered by around 10% accordingly.
AEA, following the acquisition of The Eastern Research Group (ERG), is a well-positioned global consultancy group with the strategic priority to leverage its UK expertise in energy and climate change into the US Federal Government. The recent underperformance of the shares is fundamentally unjustified although understandable given current uncertainties over trading and the delay in some government environmental initiative expenditures. |