Upstream News
Anadarko gets promising results in Brazil, increases Mozambique estimates again
Anadarko Petroleum Corp. is reporting promising results in Brazil and Mozambique.
Brazil
Results of its Itaipu-2 pre-salt appraisal well, located in block BM-C-32 in the Campos Basin offshore Brazil, encountered a gross petroleum column of nearly 58 net feet in a pre-salt carbonate reservoir. The well was drilled to roughly 16,000 feet in 4,660 feet of water.
"The pre-salt Itaipu-2 well is an aggressive step-out from the Itaipu discovery well, which is located 4 miles northwest," Anadarko senior vice president, worldwide exploration, Bob Daniels said. "The Itaipu-2 well established a fluid contact and appears to have successfully extended the accumulation 120 meters downdip from the discovery. Accordingly, the appraisal well significantly increases the areal extent of the vast Itaipu field, and we believe incorporating the data from both the appraisal well and the original discovery well will increase our previous resource estimates for the field. We are very pleased with these results and look forward to continued activity on the block."
Anadarko, through a wholly owned subsidiary, holds a 33.3% working interest in BM-C-32. BP operates the block with a 40% working interest and Maersk Oil holds a 26.7% working interest.
Separately, Anadarko also is currently drilling an appraisal of its post-salt Itauna discovery on block BM-C-29, and plans to spud the Wahoo-4 pre-salt appraisal well on block BM-C-30 around the end of the year.
Before this appraisal success, Itaipu was estimated at 300 MMboe gross resource potential, noted Global Hunter Securities (GHS) analysts in an investor note dated November 9.
The analysts said the appraisal success makes the company's Brazilian portfolio more attractive to strategic buyers looking to make their way into the Brazilian offshore market. This is a positive for Anadarko, who, noted GHS analysts, is "looking to sell their Brazilian assets to pay back any draw on their credit facility associated with the BP settlement."
Analysts at Jefferies & Co. Inc. agree, saying the appraisal well looks promising and "increases confidence that Brazil sale could fund Macondo liability. Trading at a (13%) discount to P1, APC continues to have one of the most compelling valuations in our universe," said the Jefferies analysts in a November 9 note to investors.
Currently, Anadarko values its Brazilian assets somewhere between $3 billion and $5 billion.
Mozambique
In Mozambique, the company recently increased its resource estimates. At Barquentine-3 the company encountered 662 net feet of gas pay encountered in two Oligocene fan systems. The result is thicker than prior wells in the complex, including Barquentine-1 (308 net feet in Oligocene, plus 108 in Paleocene), Barquentine-2 (230 net feet), Camarao (240 net feet, plus another 140 in shallower sands), Lagosta (550 net feet in Oligocene & Eocene), and Windjammer (555 net feet), reported Jefferies in a November 28 investor note.
In addition, Jefferies pointed out that because the latest well is located 1.8 miles south of Barquentine-2, which is in turn located 2 miles southeast of Barquentine discovery, the result suggests connectivity of reservoirs.
The gross recoverable resource estimate was increased yet again, from 10 tcf to a range of 15-30+ tcf of natural gas. Roughly two months ago, Anadarko increased its estimate from 6 tcf to 10 tcf.
The company has seven wells planned in Mozambique for 2012, including exploration wells at Golfinho, Badejo, Atum, and Orca prospects. Lagosta-2 appraisal well will be next, followed by Barquetine-4. Drillstem testing will be conducted to confirm pressure communication. Sanctioning is expected in 2013, but reserve certification, FEED, and commercial and environmental assessments still need to be completed and monetization still a ways away.
Additionally, noted Jefferies' analysts, there are two LNG trains currently planned, with an option to expand to six. The likely end market will be Pacific Rim countries such as Japan, China, and South Korea, as well as India.
"Given first gas production is not expected until 2018, we don't think this upside is priced into stock. APC continues to be one of most compelling stocks in our universe, screening significantly cheap to our $90 "proved-only" valuation, which does not include any of the Mozambique / international exploration upside," the analysts concluded.
McMoRan finds additional hydrocarbons at ultra-deep Gulf of Mexico prospect
McMoRan announced November 15 that its Lafitte ultra-deep prospect, which is located on Eugene Island Block 223 in approximately 140 feet of water, has encountered additional hydrocarbons. The well has been drilled to a true vertical depth of 29,756 feet and has been logged with wireline logs to 29,740 feet. The wireline log results indicated 56 net feet of hydrocarbon bearing sand over a 58 foot gross interval in the Cris-R section of the Lower Miocene with good porosity. Flow testing will be required to confirm the ultimate hydrocarbon flow rates from the zone, which was full to base. McMoRan controls approximately 15,000 gross acres in the immediate area of Lafitte.
The new Cris-R sand interval combined with the 115 feet of potential net pay (250 gross feet) announced previously brings the total possible productive net sands to 171 feet in the Lafitte well. These results enhance the potential of McMoRan's other acreage in the Lafitte strategic area, including McMoRan's Barataria and Captain Blood ultra-deep prospects. Barataria (10,000 gross acres) is located west-southwest of Lafitte and Captain Blood (10,000 gross acres) is located immediately south of Lafitte.
McMoRan plans to apply for a permit to deepen the Lafitte well to a proposed total depth of 32,000 feet to evaluate deeper Miocene and Oligocene objectives. Lafitte is McMoRan's third ultra-deep prospect to encounter Miocene age sands below the salt weld on the GOM Shelf. McMoRan holds a 72% working interest and a 58.3% net revenue interest in Lafitte. Other working interest owners in Lafitte include Energy XXI (18%) and Moncrief Offshore LLC (10%).
Cairn discovers gas offshore Sri Lanka
Cairn Lanka (Private) Ltd., a wholly owned subsidiary of Cairn India Ltd., notified the Government of Sri Lanka of a gas discovery at the CLPL-Barracuda-1G/1 well, located in the block SL 2007-01-001, Mannar Basin, Sri Lanka.
This is the second well in a three well frontier basin program. Cairn Lanka Private Ltd. is the operator and has a 100% participating interest in the block.
The well was drilled to a total depth of 15,554 feet in water depth of 4,950 feet and encountered 78 feet of hydrocarbon bearing sandstone in three zones between the depths of 13,343 feet and 13,799 feet. The reservoirs are predominantly gas bearing with some additional liquid hydrocarbon potential.
The CLPL-Barracuda-1G/1 well is the second successive discovery, located 23.6 miles west of the CLPL-Dorado-91H/1z discovery well and approximately 68 km from the Sri Lanka coastline.
An update on the well results will be provided after the end of the program, which is expected to be complete by early next year.
Petrobras strikes oil in Gulf of Mexico
Petrobras said it has made a new oil discovery in the extreme southwestern part of the Walker Ridge concession area, located in the US Gulf ultra-deep waters. The discovery confirms the Lower Tertiary's potential in this area, noted the company in a prepared statement.
The Logan discovery is approximately 250 miles southwest of New Orleans, at a water depth of around 7,750 feet. The discovery was made by drilling operations of well WR 969 #1 (Logan #1), in block WR 969. Further exploration activities will define Logan's recoverable volumes and its commercial potential.
Statoil is the consortium's operator, with 35% stake. Petrobras America Inc. (a subsidiary of Petrobras headquartered in Houston, Texas) holds 35% of the stake, while Ecopetrol America and OOGC hold 20% and 10%, respectively.
In the Gulf of Mexico, Petrobras is the operator of Cascade (100%) and Chinook (66.7%) oilfields and holds stakes in the Saint Malo (25%), Stones (25%) and Tiber (20%) discoveries, all with oil reserves in the Lower Tertiary. Additionally, Petrobras has stakes in the recent Hadrian South (23.3%), Hadrian North (25%) and Lucius (9.6%) discoveries, all with oil reserves and in the Mio-Pliocene.
OGDCL, partners make hydrocarbon bearing discovery in Pakistan
Oil & Gas Development Company Ltd. (OGDCL), operator of Nashpa Exploration License, together with its joint venture partners Pakistan Petroleum Limited (PPL) and Government Holding Private Ltd. (GHPL) have discovered a new hydrocarbon bearing horizon from its appraisal well Nashpa #02, located in District Karak, Khyber Pakhtunkhwa.
The Nashpa #02 well was drilled down to the depth of 4,340 meters to test the oil and gas potential of Datta, Shinawari, Samanasuk, Lumshiwal, Hangu and Lockhart formations.
"Significant" reserves of hydrocarbons at the well were reported by OGDCL. The first targeted zone "Datta Sandstone" has been tested and produced 3,370 barrels per day of crude oil and 11 MMcfd gas through 32/64" choke at well head flowing pressure 3,800 psi.
Testing of another four potential reservoir formations is expected.
PetroFrontier finds encouraging hydrocarbon indications in Australia
PetroFrontier Corp. recently noted that the MacIntyre-2 inclined pilot hole has been drilled to a measured depth of 3,051 feet. MacIntyre-2 is located in the northeastern corner of EP 127 in the Southern Georgina Basin, Northern Territory, Australia approximately 60 km northwest of PetroFrontier's first location, Baldwin -2Hst1.
MacIntyre-2 was drilled as a high angle pilot hole through the Basal Arthur Creek "Hot Shale" formation and into the Thorntonian carbonate formation. Elevated hydrocarbon shows were recorded throughout the entire Basal Arthur Creek "Hot Shale" formation with sustained and peak levels generally two to three times greater than those seen in the vertical pilot hole at Baldwin -2Hst1.
The logging results for MacIntyre-2 show nearly 72 feet of true vertical depth pay with porosities varying between 5 - 11%. Studies completed by two independent petrophysical companies indicate that the Basal Arthur Creek "Hot Shale" zone in MacIntyre-2 may be oil bearing, although natural gas is present as well.
A drill stem test was conducted in the high angle pilot hole over a 114.8 feet interval. Although a significant flow was not expected and did not occur as the formation is an unconventional oil shale, positive results were received as both the shut in pressures and the flow pressures increased throughout the test.
Due to increasing rains and a continued heavy rain forecast in the Northern Territory, the drilling rig is being demobilized and the horizontal portion of MacIntyre-2 will be completed in early 2012 after the rainy season.
PetroFrontier is in the process of completing the Ross Infill 2D seismic survey over the northern portion of EP 103 and expects it to be completed on time and within budget. The crew is currently recording the final line of the survey adjacent to the Sandover Highway as it leaves the area. The 235 mile survey was required to delineate drilling targets in the area. Additional seismic acquisition is also planned in EP 104 and EP 128 after the wet season in 2012.
Paul Bennett , CEO and president, commented, "We had strong hydrocarbon indications while drilling through the Basal Arthur Creek "Hot Shale" in MacIntyre-2. There was evidence of oil and effervescing gas (up to C5) in the samples. Definitive results will be confirmed once we frac and flow MacIntyre-2H and Baldwin -2Hst1. We are extremely encouraged by our results to date and by the fact that we now have two wells over 60 km apart that have shown very encouraging hydrocarbon indications in the Basal Arthur Creek "Hot Shale."
Petronas makes oil discovery offshore Malaysia
Petronas' exploration and production arm Petronas Carigali Sdn Bhd has made a significant oil discovery offshore Sabah, the company said November 15. The discovery was made via the Wakid-1 well within Block 2G-2J, about 100km northwest of Kota Kinabalu.
The well was spudded on May 30, 2011 and was completed on July 4, 2011. It reached a total vertical depth of 3,330m and confirmed the presence of significant oil, and some gas-bearing, reservoirs. Three production tests were conducted in three different reservoirs which flowed oil at a combined maximum rate of 8,200 barrels per day.
Current preliminary estimation of the hydrocarbon-in-place from this discovery is 227 million barrels of oil equivalent (MMboe), with expected upside potential. Petronas Carigali plans to further appraise the discovery in the near future. Wakid-1 is the second well drilled in Block 2G-2J since the award of its Production Sharing Contract in October 2010.
The block's first well, Tambuku-1, was drilled early this year, but yielded only a minor gas discovery. Petronas Carigali is the sole equity holder of the PSC for the block.
Max Petroleum increases Kazakh production
Max Petroleum plc updated its production activities in the Blocks A&E License area in the Republic of Kazakhstan. The company began testing the KZIE-1 discovery well in the East Kyzylzhar I Field, flowing 42 degree API oil at a stable rate of 1,484 barrels of oil per day (bopd) on a 24/64" choke with flowing tubing head pressure of 20 bars during a 24 hour test period from six meters of perforations in a Jurassic reservoir at true vertical depths ranging from 1,110 to 1,118 meters. The well has been connected to temporary production facilities and is on long-term test production.
With all producing wells online, the company reached a record level of production of 5,625 bopd on November 19, 2011, and plans to bring up to seven additional wells onto production before December 31, 2011. Future daily production rates will remain variable due to several high rate wells being subject to periodic shut-in during long-term testing. The company produced an average of 3,235 bopd since September 30, 2011 and an average of 3,639 bopd since October 31, 2011.
Michael B. Young, president and CFO, commented, "We have more than doubled the company's daily production since June 30th, with two wells producing in excess of 1,000 bopd each. We currently have four of our six commercial discoveries on production and plan to have all six producing by December 31. This steep ramp up in production will have a significant impact on our cash flow generated from operations, as we actively pursue our ongoing exploration and appraisal drilling program in Blocks A&E."
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