Market attention is likely to fall on several large and smaller oil and gas operators off the coast of Namibia in West Africa as a drilling effort kicks off this September.
The likes of ExxonMobil, GALP, ONGC, Total and Royal Dutch Shell (RDSB) are involved, along with small and mid-cap firms like Chariot Oil & Gas (CHAR:AIM), Eco-Atlantic Oil & Gas (ECO:AIM) and Tullow Oil (TLW).
Most of these names were attracted by the Wingat-1 discovery made by Brazilian explorer HRT (now Petrorio) which demonstrated there could be oil potential in a region which had previously been thought only to contain natural gas.
Because oil is easier to transport, an oil find would be much easier to develop than gas.
Canaccord Genuity analyst Charlie Sharp says: ‘With a working oil source rock identified, the chances of finding oil have improved markedly in this large under-explored area, and the search is now on for good quality reservoirs and traps in close proximity to the source rock.
‘After emergence from the low oil price period, exploration drilling – at least four wells – gets underway in September.’
Sharp adds: ‘Two wells will be drilled in the central area offshore Namibia (Walvis Basin) followed by two in the south (Orange Basin). Drilling is expected to start in September and, including rig movements, is likely to continue until the end of the first quarter 2019. It is the first two wells that are likely to be of most E&P interest.’
WELL 1 – Coromorant-1 on the PEL 37 licence is targeting 124 million barrels, drilled by Tullow which has a 35% stake; success would have positive implications for Eco Atlantic’s Osprey target on the adjacent PEL 30.
WELL 2 – Prospect S on the PEL 71 licence is targeting 459 million barrels, being drilled by Chariot which has a 65% stake. There are several follow-on targets in the event of success with an option to drill a second well.
Sharp concludes: ‘The Namibian exploration drilling campaign is eagerly anticipated by the industry and market. For wildcat drilling, chances of success are good – 20-25% – buoyed by the proven presence of mature oil source rock, and fiscal terms are attractive.
‘Crucially, any single discovery could be a company maker for the E&Ps. In turn, such discoveries will have a significant impact on derisking follow-on targets, and that would very likely lead to raised interest from the resource-hungry majors.’