Kenya L8 Mbawa drilling update
JV partner Pancontinental Oil & Gas has announced that the Kenya L8 licence operator Apache Kenya has secured the use of the deepwater drilling ship Deepsea Metro 1 to drill the giant Mbawa Prospect. Apache is anticipating a spud date within Q3 2012, with the actual date depending on when the drilling rig is finished with its current operations. The well is expected to take some 45 to 60 days to complete to a planned total depth of 3,250m subsea in water depth of 860m, easily within the range of modern equipment.
Pancontinental has a 15% interest 'free-carried' through Mbawa drilling by Tullow Oil up to a 'cap' of US$ 9 million (as may be reduced by other exploration expenditure). Pancontinental now expects to have to contribute more to the well cost due to increased well cost estimates.
Pancontinental estimates that Mbawa has maximum potential to contain 4.9 billion barrels of oil in place at the main Tertiary / Cretaceous level with significant additional potential also to be tested by the well at the deeper Upper Jurassic level and shallower Tertiary levels. Only drilling is capable of verifying the oil and gas volumetric potential (if any) of the Mbawa Prospect.
Pancontinental has four projects offshore Kenya covering more than 18,000 sq kms in licence areas L6, L8, L10A and L10B, with the L8 / Mbawa project being the most advanced and Mbawa being the first prospect to be drilled.
Pancontinental's CEO Barry Rushworth commented:
'Pancontinental is in the unique position of having sizeable interests in a number of Kenyan and Namibian offshore licences and having substantial leverage to any Mbawa drilling success. We are very pleased that a drilling rig contract has now been signed by our operator Apache for the L8 Mbawa Prospect. We are pursuing what we see as a major oil play rather than a gas play offshore Kenya and we are doing the same offshore Namibia. The economics of oil developments are often far better than those for gas, with potential for much earlier cash flow and much lower development costs compared to LNG, for example.
After the recent consolidations relating to Dominion, Ophir and Cove, Pancontinental is one of the few listed companies globally offering significant leverage to two of the most exciting oil and gas regions of the decade, namely East Africa and Namibia. Apache is now leading the L8 venture in an aggressive exploration programme and in our other Kenyan blocks L10A and L10B we also have fast-moving activity led by BG Group'.
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