Orca drops Uganda Block 5 drilling plans

Orca Exploration Group decided not to drill a well onshore on Exploration Area 5 in northern Uganda after determining that the risks were too high to justify the costs.

Uchenna Izundu
International Editor

LONDON, Aug. 7 -- Orca Exploration Group Inc. decided not to drill a well onshore on Exploration Area 5 in northern Uganda after determining that the risks were too high to justify the costs.

The company earlier had planned to exercise an option to earn 50% of the block by committing to a drilling program with Tower Resources, which owns 100% of the exploration area (OGJ, Dec. 24, 2007, p. 40).

Orca said it had always regarded the project "as medium to high risk, and would only proceed from the seismic phase to the drilling phase if the seismic and other data acquired had the effect of reducing risk by identifying acceptable prospects." This had been estimated at $10-15 million for two exploration wells, with Orca paying 83.33%.

Orca said it will proceed with drilling the Songo Songo West well in Tanzania next year because it is lower risk with higher upside than Uganda EA5. It also has the added advantage that Orca can recover its full costs from the Songo Songo PSC cost-recovery pool, the company said.

Orca has begun a rig tender process for two to three wells and has collected drilling materials for that program.

It said it was in discussions to secure gas markets in the near term for this potentially large resource adjacent to Songo Songo field. It also has commissioned an independent resource assessment of Songo Songo West.

Contact Uchenna Izundu at uchennai@pennwell.com.

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