PCL - Pancontinental Energy

Africa Oil: Ngamia-1 Well Discovers Additional Oil in Kenya

05/07/2012 - 10:27

Africa Oil Corp. (TSX VENTURE: AOI)(OMX: AOI) ("Africa Oil" or the "Company") is pleased to provide the following update in respect of the previously announced oil discovery at the Ngamia-1 well on Block 10BB, Kenya. Africa Oil holds a 50% working interest in this block, which is operated by Tullow Oil plc ("Tullow") which holds the remaining 50% interest.

The Ngamia-1 exploration well in Kenya has now been deepened to a total depth of 1515 meters and has encountered in excess of 100 meters of net oil pay in multiple reservoir zones over a gross interval of 650 meters. Following the initial announcement on the 26th March 2012 that Ngamia-1 had encountered in excess of 20 meters of net oil pay, the well has now been deepened from 1041 meters to 1515 meters. A further four good quality, oil-bearing reservoir zones have been encountered. Due to deteriorating hole conditions, a sidetrack of the well was required to deepen the well. Moveable oil with an API greater than 30 degrees has been recovered to surface from six of these intervals. This oil has similar properties to the light waxy crude encountered in the upper reservoir zone.

The Ngamia-1 well will now be drilled to a depth of approximately 2,700 meters to explore for deeper potential including the Lokhone sandstone which was one of the primary objectives of this well. Plans are in place for at least two drill stem tests upon completion of drilling operations. The Weatherford 804 rig will then move to Block 13T where the Twiga-1 (formerly Mbango South) wildcat well will spud in the second half of 2012. A further rig is being sourced to drill the Block 10A Paipai prospect in the Cretaceous Anza Graben system.

Africa Oil President and CEO, Keith Hill, stated, "The total pay sand thickness in this well has far exceeded pre-drilling estimates and certainly has highly positive implications for numerous similar prospects on trend. Based on these results, we are working with our partner Tullow to source additional rigs and acquire additional seismic to accelerate the exploration campaign in this basin. Our goal in the near term will be to assess the size and extent of the potential of this newly discovered basin."

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http://www.businesspress24.com/pressrelease1111078.html

Tullow Says Kenya’s Oil Potential May Exceed Uganda
By Eduard Gismatullin - May 17, 2012 3:39 PM GMT+0800

Tullow Oil Plc (TLW) Chief Executive Officer Aidan Heavey said Kenya’s oil potential may be greater than neighboring Uganda, where the company and its partners have found about 2.5 billion barrels of resources.

“What surprised us in Kenya was that the first well had such a big section of oil,” Heavey said in London. Drilling at Tullow’s Ngamia-1 well revealed more than 100 meters (328 feet) of oil, more than double the amount at its other East African exploration wells, the company said earlier this month.

Tullow, which has unlocked billions of barrels in frontier regions from Ghana to French Guiana, is seeking to replicate those finds in East Africa. While Kenya has no proven oil reserves, Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) found natural gas in its Anza Basin in 1976. Tullow is working with Total SA (FP) and Cnooc Ltd. (883) to develop oilfields over the border in Uganda, where it expects to start production as soon as this year.

Ngamia-1’s column of oil is the largest oil-bearing section Tullow has found in a single well, Heavey said today. “It’s only one well in an area nearly the size of England,” he said. The London-based company has drilled the well, in Block 10BB, to 1,515 meters and plans to extend the depth to 2,700 meters.

“We are pretty confident that we can move pretty fast in Kenya if we prove up the commercial amount of oil,” Heavey told reporters. “It’s a great start.”

Separately, the CEO said that Tullow is in talks with “a few companies” about the possible sale of its assets in Pakistan and Bangladesh.

http://www.bloomberg.com/news/2012-...oil-potential-may-exceed-uganda-correct-.html

Hartleys writes;

PANCONTINENTAL OIL AND GAS NL - More Legs Than a Millipede – Mbawa Imminent

Pancontinental Oil and Gas Limited (“Pancontinental”, “PCL”, “Company”) is on the threshold of drilling at the first of potentially four company making wells over the next 12 months. The Company will retain a 15% (largely free carried) working interest into the drilling of the giant 1 billion barrel potential Mbawa prospect, on the L8 permit offshore Kenya, scheduled for spud in early August. The upside potential for PCL from this well alone is in excess of 169cps. If we assume 20% chance of success, this results in a risked valuation of 34cps.

L10A / 10B – Two Wells H1 2013
Possibly less obvious, and overshadowed by the impending action at Mbawa, is the likely drilling at the BG operated L10A and L10B blocks. Exploration on these has been fast tracked, with drill ready prospects likely by late Q3 2012 and up to two wells possible in H1 2013. Existing 2D seismic and early processing of recent 3D suggests the presence of Mbawa sized analogue structures as well as other large leads in different plays.

The Company also has a 40% interest in Block L6 where 3D seismic is scheduled to commence shortly.
Mbawa South – Near Term Followup to Mbawa

Additionally, Apache has recently completed 3D seismic over the Mbawa South prospect, which anecdotally is of similar potential to Mbawa. We expect that any encouragement at Mbawa would result in near term drilling at Mbawa South. PCL’s farm-out agreement with Tullow would see them largely free carried (up to US$6m) at a 10% working interest in a second well on L8.

Namibia – Drilling by Others Nearby Plus Possible Deal Flow

We are also aware that HRT has contracted a drill ship for a 180 day drilling program offshore Namibia, which should commence in Q3/4 2012 and will include drilling in permits adjacent to PCL’s large, 85% owned, holding in the Walvis Basin. Peers in adjacent acreage have released independent estimates for prospective resources of many billions of barrels of oil. PCL’s acreage is the epicentre of interpreted localised oil seeps, identified by satellite imaging of surface slicks. A recent farm-in by BP to Serica Energy provides confidence that PCL could farm-out its acreage on similar terms, if it chooses to do so.

Once in a Decade Opportunity

PCL could have direct exposure to up to 4 wells offshore East Africa and indirect exposure to up to 2 wells offshore Namibia over the next 12 months. Whilst offshore Kenya has not been tested by drilling in recent times, the Lamu Basin is considered a “sister” basin to the Rovuma Basin where the discovery rate to the south, in Tanzania and Mozambique, has been a staggering 90% over the last 24 months (18 from 20 wells).

It is rare to see a junior exploration company with this much exposure to drilling in what are considered highly prospective basins on world class sized prospects. For investors that understand risk / reward, this is a once in a decade opportunity to get exposure to upside potential of ~$8 per share. The Company is fully funded for all foreseeable drilling activity, with ~$60m in cash.

In a success case, management and insider holdings in excess of 25% will guarantee that any takeover will not come cheaply. We rate Pancontinental as a Speculative Buy with a price target of 33cps.

HIGHLIGHTS

Pancontinental Oil and Gas NL is an ASX listed (PCL.AX) oil and gas explorer with a focus on offshore Africa. The Company has interests in 4 permits offshore Kenya and one large permit offshore Namibia, arguably two of the hottest oil and gas exploration areas globally.

PCL’s strategy has been to acquire early stage interests in areas that it believes are oil prone rather than gas prone. The assets offshore Kenya and Namibia both have a strong geological oil story, including the presence of oil slicks. Solid geological modelling of the depositional environment indicates oily source rocks that are buried at the right depth to be generating oil and excellent reservoir quality has been indicated by historic wells at both areas. When these ingredients are coupled with very large prospect sizes, it is only a matter of time before drilling occurs.

East Africa is in its third round of drilling in the last 2 years, with outstanding success – 18 successful wells from 20 attempts (14 of these are exploration wells). PCL’s billion barrel Mbawa prospect will be drilled in August this year and is on trend to the gas discoveries to the south; however, it will be the first prospect to be drilled that is specifically targeting oil.

Namibia has just entered its first round of drilling after a ~20 year hiatus with 4-6 wells planned over the next 12-18 months. Given global success rates are >20% using modern techniques, we would expect one of these wells to be a discovery, which would significantly re-rate all Namibian acreage. There is now very little acreage left offshore Namibia, so industry players wishing to gain exposure must deal with existing owners. We have seen several transactions over the last two years with the HRT takeover of UNX for ~US$700m as well as the recent farm-in by BP to Serica Energy (SQZ.LN). The transaction metrics indicate look through of roughly $1m per percentage point in each block (i.e. PCL’s 85% interest has a look through valuation of ~US$85m).

Pancontinental is yet to acquire and reprocess existing seismic or to start acquisition of new seismic. We believe that part of the reason for this is the potential to farm-out these commitments on favourable terms to a highly regarded oil and gas international.

HRT has recently contracted a drill ship for a 180 day program that will include drilling in permits adjacent to PCL’s acreage, beginning in Q3/4 2012.

Read More at;
http://www.pancon.com.au/investor-centre/broker-reports/reports/010612.pdf

ANother update from DOlmen

Target at 0.30 which I would say is on the money

http://www.dolmenstockbrokers.ie/reports/Dolmen%20Daily%2013%20June%202012.pdf


Overnight, Pancontinental announced that it has started its 3D offshore seismic survey of Kifaru, in the L6 licence offshore Kenya. The company has a 40% interest in the licence, the remaining 60% being held by the current operator FAR. The data acquisition, which should be completed in early July 2012, will cover about 680 sq km and cost $13.67m (Pancontinental’s share is $5.5m). Licence area L6 off the Kenyan coast lies in the Lamu Basin and within the Tana River delta, north of the recent natural gas discoveries off the coasts of Mozambique and Tanzania. Current interest in Pancontinental centres round its first offshore Kenya well on the Mbawa Prospect in Block L8, which is being drilled by Apache Corporation in Q312. Pancontinental has a 15% stake in that prospect, in partnership with Apache (50%), Origin Energy (20%) and Tullow (15%). As such, today’s announcement is an incremental positive for the company, illustrating continued progress in a second target area, that is commencing slightly ahead of schedule (3D seismic had been pencilled in for Q312).

Also - Pancontinental's new Presentation can be found at;

http://www.pancon.com.au/investor-centre/company-presentations/reports/PCLPresentation1206.pdf

Good Luck all PCL long ter holders, good times are coming.

Lets hope that PCL can find a little Oil amongst all this Gas. Getting ready to Drill and ready to join the Party......

Oil and Gas are the new African queens

By Emily Gosden
5:27PM BST 01 Jul 2012

When Royal Dutch Shell proposed a 195p-a-share, £992m offer for Mozambique-focused oil and gas explorer Cove Energy in February, many in the City regarded it as a “full” offer.

“The valuation looks stretched,” wrote one analyst. “The proposed offer is unlikely to face a challenge,” said another. More than four months on, Thailand’s PTT now leads a bidding war with a 240p-a-share agreed bid.

The City now expects Shell – which has so far raised its offer to 220p – to come back and at least match PTT, potentially even upping its bid to above 300p. Cove’s prized asset is its 8.5pc stake in the Rovuma 1 block off the Mozambique coast, where giant gas reserves have been discovered.

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http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9368387/Oil- and-gas-are-the-new-African-queens.html

New from Apache, Apache at a Glance, regarding the offshore Kenya operations at Block L8 / Mbawa (partnered with PCL of course).

It's probably easier on the eyes if you read the PDF file, here's the link:
http://news.apachecorp.com/go/doc/3523/1499855/

But for those of you that don't have access to a PDF reader at the moment I have copy/pasted the text:

APACHE AT A GLANCE

Apache’s oil and natural gas operations reach from the United States to Canada, Egypt’s Western desert, the North Sea, Australia and Argentina.
Our global exploration program is seeking new resources in promising new areas such as offshore Kenya.

Established in 1954, Apache
Corporation has grown to
become one of the world’s
leading independent oil
and gas exploration and
production companies with
US$52 billion in total assets
as of year-end 2011.

Apache Kenya Ltd, a subsidiary of Apache
Corporation, plans to drill an exploratory
well in Block L8 offshore Kenya in the
Indian Ocean beginning in the third quarter
of 2012. Block L8 is located about 70
kilometres offshore, east of Kilifi and
Malindi.

Apache’s growth is the work of a diverse
team of committed people who share
values of integrity, hard work and respect
for others. The company provides its
employees with the latest technology and
empowers them to make the decisions to
fuel its growth. Apache stretches the limits
of what’s possible through determination,
adaptability, discipline, a sense of urgency
and a long-term perspective.

With operations in the United States,
Canada, the North Sea, Egypt, Australia
and Argentina as well as exploration
activities in other nations, Apache’s
critical mass of exploration acreage,
cash-generating production and financial
flexibility enables the company to explore
for new resources, acquire properties with
upside potential and enhance production
from mature fields with new investment
and more efficient operations.

APACHE’S PLANS IN KENYA

Apache is exploring for world-class oil resources in the emerging
area of East Africa.

Exploring for oil in deep water thousands of meters below the Indian Ocean is an exciting but risky business involving the efforts of many trained professionals – geologists, geophysicists and engineers – who work closely with Kenyan Ministry officials, the National Oil Corporation and local consultants. Apache employs advanced technologies to identify prospects with the greatest chance of success, including 3dseismic surveys that provide images of the subsurface. After the well location is confirmed, a modern deep-water drill ship moves into position for drilling operations that may last two months or more. If the well is successful and oil is discovered, additional wells will be drilled to locate enough resource to make the project economically attractive to the oil companies and the government. A successful project may take six to 10 years from drilling the first well to the first oil produced and sold.

WHERE IS THE WELL LOCATED?

Apache will be drilling in the northeastern corner of Block L8, about 70 km east of Malindi within Kenya’s exclusive economic zone (EEZ). The drilling vessel will not disturb fish or fishing vessels in areas of the Indian Ocean where fishing is normally undertaken. The drilling operation will also not disturb tourism operations or any other commercial operations along the Kenyan coast.

WILL THE AREA BE CORDONED OFF IF OIL IS FOUND?

The area will not be cordoned off. The immediate area around the drilling ship will be isolated during the drilling operation.

WHAT WILL HAPPEN IF OIL IS NOT FOUND?

If the well is not successful, it will be plugged with cement in accordance with internationally accepted procedures to ensure no underground fluids are released to the environment.

POTENTIAL ECONOMIC BENEFITS

Oil exploration and development is a partnership that offers economic opportunities for Kenya.

The benefits of successful oil exploration may be seen by the Kenyan people in many different forms:

* The Government will earn revenues from sale of oil that can be used for the nation’s development.

* Infrastructure such as roads and ports may be improved as a result of petroleum operations during development and production. This also will benefit the local communities.

* Opportunities to supply materials and services to oil development projects may result in employment for local residents. These opportunities will depend on the ability of Kenyans to develop the necessary capabilities and standards. Fishermen may benefit through improved markets for their products.

* Oil companies’ corporate social responsibility programs generally are focused in communities in the vicinity of operations.

The Government will decide how revenues from oil production will be used. The Government may decide to allocate some funds for the development of social infrastructure – schools, hospitals and other needed projects – in areas where oil and gas are found.

ENVIRONMENTAL STEWARDSHIP

Kenya’s National Environment Management Authority (NEMA) reviewed and approved an Environmental Impact Assessment report submitted by Apache Kenya Ltd with the assistance of ESF Consultants of Kenya, an environmental consulting firm. The report details Apache’s comprehensive waste management and oil spill contingency plans. All wastes created during the drilling project will be disposed of appropriately to ensure no harm to fisheries, tourist sites and the environment. Apache and its contractors are adequately prepared for possible oil spills using internationally approved procedures.

Apache is working closely with the Ministry of Fisheries development, the Kenya Maritime Authority, the Kenya Wildlife Service, the National Oil Spill response committee and other organizations to ensure the drilling operation is conducted safely and efficiently.

HOW CAN WE STAY INFORMED?

While drilling is under way, the most efficient methods will be used to communicate with communities in case of emergency or other necessary announcements. When drilling ends, Apache and its partners will announce the results of the operation.

CULTURE OF RESPONSIBILITY

Apache is committed to operating in a safe and environmentally responsible manner and building enduring relationships with the communities where it operates.

Apache has a successful track record of operating in sensitive marine environments like the Gulf of Mexico, Alaska, the North Sea and the Indian Ocean off Western Australia.

* Apache has undertaken seismic, drilling and production operations – including deployment of a floating production, storage and offtake vessel – in waters adjacent to the Ningaloo reef World Heritage Site in the Indian Ocean off the Australian coast.

* As one of the industry’s most active explorers, Apache has substantial experience conducting 3-dseismic operations in ways that minimize the impact on marine environments. Apache recently completed a 3dsurvey on block L8 in Kenya without incident or impact on the environment.

* Apache’s technical staff has taken important roles in development of oil spill containment systems in the Gulf of Mexico, the North Sea and the Indian Ocean. These systems provide well containment equipment and technology with the goal of being prepared to respond to well control incidents in deepwater drilling operations.

Around the world, Apache employees are empowered to ensure a safe workplace and environmentally responsible operations.

IN THE COMMUNITY

Apache’s corporate social responsibility programs place emphasis on education. An example is found in Egypt. Springboard ”” Educating the Future, a U.S.-based nonprofit organization established by Apache, collaborated with Egypt’s National Council for Childhood and Motherhood (NCCM) and the Sawiris Foundation for Social development to build 201 schools for young girls in poor rural villages in Egypt.

Community schools are powerful catalysts for change in the rural villages. There is no tool for development more effective than the education of girls and women. No other
policy is as likely to raise economic productivity, lower infant and maternal mortality, improve nutrition, promote health and increase the chances of education of the next generation.


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http://news.apachecorp.com/go/doc/3523/1499855/

Pancontinental Oil and Gas raises additional A$4.43M to help fund Kenya and Namibia exploration
Tuesday, July 31, 2012 by Bevis Yeo

Pancontinental Oil & Gas (ASX: PCL) has raised A$4.43 million for its Kenyan and Namibian oil and gas exploration after placing shortfall shares from its share purchase plan that closed in May.
It completes the original A$50 million placement, consisting of a A$45 million share placement to institutional investors and the A$5 million share purchase plan.
Proceeds from the shortfall placement will be used to help fund drilling of the Mbawa well in Block L8, offshore Kenya; shoot seismic over L8 and L6 as well as EL 0037 in Namibia; and ongoing exploration in Blocks L10A and L10B in Kenya.

The placement of 25.3 million shares priced at A$0.175 each was made to sophisticated investors as well as international and domestic institutional clients of Hartleys Limited.

Mbawa drilling

Pancontinental has a 15% stake in L8 where operator Apache Corporation (NYSE:APA) is drilling in August the highly prospective Mbawa prospect that targets up to 700 million barrels of oil.

While Tullow Oil (LON: TLW) had agreed to free carry Pancontinental up to US$9 million (A$8.7 million) for drilling of Mbawa under its farm-in to the block, other exploration expenditure and higher cost estimates will require Pancontinental to contribute to the well cost.

The prospect, which Pancontinental sees as a major oil play rather than a gas play, is estimated to have a maximum potential of 4.9 billion barrels of oil in place at the main Tertiary/Cretaceous level

http://www.proactiveinvestors.com.a...fund-kenya-and-namibia-exploration-31858.html

Pancontinental Oil and Gas NL (“Pancontinental”, “PCL”, “Company”) is mere weeks away from spud at its billion barrel potential Mbawa prospect, offshore Kenya. Ophir Energy Plc (“Ophir”) announced yesterday another in a long string of discoveries, offshore Tanzania. The Deep Sea Metro 1 drillship, used to drill Ophir’s well, will now move to neighbouring Kenya to drill Mbawa on Block L8. We estimate a spud date in mid August.

Drilling of Mbawa will be operated by Apache Energy Corporation (“Apache”) and is the first well drilled offshore Kenya with the aid of 3D seismic. PCL’s joint venture partners, Tullow and Apache, have both confirmed the prospectivity of Mbawa. Seismic interpretation has revealed direct hydrocarbon indicators and dual flat spots that may indicate gas over oil over water. Surface slicks coincident with the edges of the mapped structure and oil shows in historic wells also provide evidence of oil in the basin. Pancontinental is largely free carried for its 15% interest in the well.

Mbawa Re-Cap - >$1 per Share for PCL

Mbawa is located in 860m of water and will be drilled to a total depth of 3,250m. The primary target is located at the Tertiary / Cretaceous level (the same horizon as the recent Ophir discovery) with the main secondary target in deeper Jurassic horizons. The well should take 45-60 days to drill. Logging While Drilling will determine which horizons are considered prospective and these will be subject to a comprehensive logging suite. The well will not be flow tested and will be plugged and abandoned as per standard exploration practice. In the event of discovery, subsequent wells will undertake flow testing; however, rock properties and flow potential will be indicated on the logs from the upcoming well.

There is substantial follow-up potential to Mbawa, as well as other play types, so any indications of hydrocarbons would likely result in additional drilling on the permit. PCL is also free-carried (capped at $6m) in a second optional well that would reduce its percentage stake in the permit from 15% to 10%.

And Then?

In addition to the followup potential at L8, PCL has a 15% interest in blocks L10A and L10B, where operator, BG, is aggressively moving towards possible drilling in H1 2013. We believe that the Mbawa outcome is largely independent of BG’s desire to drill on these permits, where early processing and interpretation of recent 3D seismic has shown very promising results. PCL has a 40% interest in Block L6, adjacent to L8 and with the same source kitchen. 3D seismic was recently acquired over the most promising prospects and we expect further news on potential towards the end of the end of the year, ahead of farm-out in H1 2013.

PCL also has an 85% working interest in a large permit offshore Namibia, in the Walvis Basin. Drilling is scheduled in nearby permits for mid 2013. It is likely that a farm-out will occur over the next few months.

Huge Upside – Multiple Wells

We estimate in excess of $6 per share in upside potential from PCL’s offshore Kenya permits. Drilling at Mbawa is imminent, additional followup drilling in L8 as well as L10A/B is likely in H1 2013. Activity by others offshore Namibia could also result in a large re-rating. Given the phenomenal recent East Africa success and the multiple drilling catalysts, we recommend exposure to PCL with a Speculative Buy recommendation and a price target of 34cps.

US firm joins hunt for oil in Kenyan coast

By SANDRA CHAO and MARK AGUTU
Posted Wednesday, August 8 2012 at 22:30


An American company has started the search for oil off the Kenyan Coast, barely four months after Tullow Oil struck huge reservoirs in Turkana County.

Apache Corporation will start drilling in the Lamu basin in a week at a block known as Mbawa 1, 70 kilometres off the shoreline.

The company’s public and international affairs manager, Mr John Roper, told the Daily Nation the project would start between August 10 and 15.

“The well, called the Mbawa 1, is targeting what we hope is a large oil reservoir. The Mbawa well will take about two months to drill to its planned depth of 3,200 metres. The main challenge we face in drilling this well is the same as whenever we drill an exploratory well ”” we won’t know for sure what we have got until we’re finished,” he said.

Mr Roper said they had contracted Deepsea Metro 1, a ship owned by Odfjell Drilling Company of Bermuda, to sink the well.

He said the block was picked because it is identical with the ones on the northern shores of Madagascar where the company found more than 30 billion barrels of oil.

“If you move Madagascar over to Kenya (as if they are puzzle pieces), you’ll see its northern and western coasts fit very nicely into the coast of Kenya, where it actually originated prior to the major plate breakup that happened about 150 million years ago.

“Along Madagascar’s northern shore there’s about 30 billion barrels of oil in place. If you do plate reconstructions, what you find is it fits very nicely with our block position in the Lamu basin. The oil found in Madagascar comes from Jurassic source rock and we believe this same source could be in the area where we are planning to drill off of the coast of Kenya,” Mr Roper said.

He said they were discussing with government, business leaders and community representatives plans for the exploration.

The group has assured fishermen that they will not be displaced by the oil hunt.

Project cleared

The project has already been cleared by the National Environmental Management Authority.

On Wednesday, The New York Times described Apache as an independent energy company, which explores for, develops, and produces natural gas, crude oil, and natural gas liquids.

“As of December 31, 2011, Apache had exploration and production interests in six countries: the United States, Canada, Egypt, Australia, offshore the United Kingdom in the North Sea, and Argentina,” it said.

This is not the first time multinationals are digging up the seabed for oil. In 2008, Woodside Energy wound up activities in Lamu after drilling a dry well the previous year.

The company sunk a 4,887-metre well only to find sandstones and fresh water.

In 2007, China National Offshore Oil Corporation surrendered four blocks in order to carry out a seismic survey to map out oil potential deposits.

Tullow is currently exploring whether the Turkana reservoirs are commercially viable.

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http://www.nation.co.ke/News/US+fir...n+coast/-/1056/1474636/-/gerd39z/-/index.html

PCL Holders - Good luck - Hang onto your Hats - Here we go...

Kenya’s deepwater debut heralds east Africa’s first oil

Posted on July 12, 2012 at 6:19 am by Bloomberg in Africa, Offshore, Oil

Apache Corp. (APA) will drill Kenya’s first deepwater oil well next month, a prospect that could add a $70 billion crude find to the record natural-gas discoveries along East Africa’s coast.

Apache and partners including Tullow Oil Plc (TLW) said the Mbawa well is likely to strike oil based on seismic data and slicks seen on the Indian Ocean’s surface. The drilling is targeting as much as 700 million barrels, a resource valued at twice Kenya’s annual economic output at today’s oil prices. With a 50 percent a stake in the well, a strike could add more than 10 percent to Houston-based Apache’s reserves.

“What we are looking at in this well is to see if we can actually change the paradigm” in what’s been a gas-prone area, Tullow Chief Financial Officer Ian Springett said in a phone interview. “It’s a high-risk, high-upside well.”

East Africa has become one of the world’s most active exploration areas since Anadarko Petroleum Corp. (APC) made the decade’s biggest gas discovery off Mozambique. An oil find would be a boon for Kenya as the commodity is easier to sell than the gas found in neighboring Tanzania and Mozambique, which will require spending at least $50 billion on export plants. The Lamu basin, where Mbawa is sited, may hold as much as 5 billion barrels, according to one of the well’s partners.

The Mbawa seismic study indicates the possible presence of gas and crude, Bob Brackett, an oil analyst with Sanford C. Bernstein & Co., wrote in a May report. “Another indicator of oil ”” sea surface oil slicks that have been collected” in the area, he said.

Africa Explorers

Explorers in East Africa including Anadarko, Statoil ASA (STL), Eni SpA (ENI) and BG Group Plc (BG/) have discovered more than 100 trillion cubic feet of gas, enough to meet U.S. demand for more than four years.

The interest in East Africa can be seen in the bidding war for Anadarko’s London-listed partner Cove Energy Plc (COV) between Royal Dutch Shell Plc (RDSA) and PTT Exploration & Production Pcl (PTTEP), putting Europe’s largest oil company against Thailand’s state energy producer. The battle has more than doubled Cove’s share price this year.

“Exploration of East Africa is at a very, very early stage, and yet success so far has been very significant,” Andrew Whittock, a London-based analyst at Liberum Capital Ltd., said by phone. “Most industry is following behind and trying to establish positions.”

Apache, the second-largest U.S. independent oil and natural-gas producer by market value, will operate the Mbawa well in the L8 Block. The Deepsea Metro 1 rig will take about two months to drill to the 3,250-meter (10,663-foot) target depth at a cost of more than $60 million. The partners may follow up with the Tai well, which could hold 500 million barrels of oil resources, according to Apache.

‘Looks Attractive’

“There are no wells in our block so we can’t say definitively that the crude is there,” John Bedingfield, a vice president for exploration at Apache, told investors in June. “From a prospect perspective, we think it looks fairly attractive.”

John Roper, an Apache spokesman, declined to comment on Kenya beyond the company’s statements at its June investor conference.

The Lamu basin geology is similar to areas in Madagascar, the island that was joined to East Africa before splitting apart about 145 million years ago. Since the 1970s, Royal Dutch Shell Plc, Chevron Corp. (CVX) and Eni along with other companies have drilled in Madagascar, which holds 24 billion barrels of heavy oil resources, according to Afren Plc. (AFR) Only about a dozen wells were drilled off the island.

Pulled Apart

“Historically Madagascar was attached to Kenya and during the rifting it pulled apart,” said Frank Patterson, a vice president on exploration at Anadarko. “We also have seen data in Mozambique that indicates there is potential for oil source rock in there too. We are still high on oil in East Africa, but it’s got to be in the right setting.”

Tullow Oil, which holds the most exploration licenses in Africa of any U.K.-based explorers, has opened four frontier oil and gas provinces in French Guiana, Ghana, Uganda and Kenya, with more than 4 billion barrels since 2007.

Using continental drift theory worked when it found crude in French Guiana, which split from West Africa, an oil-producing region, millions of years ago. In March it discovered crude at on onshore well in Kenya.

Two years ago, Anadarko said it discovered East Africa’s first deep-water oil with its Ironclad well in the Rovuma Basin off Mozambique. In February, Statoil and Exxon followed up with the Zafarani well off Tanzania, which opened an older reservoir with crude potential. Both wells need more testing to prove petroleum resources.

Cheaper to Produce

“We are still trying to understand what Ironclad means,” Patterson said. “We have some theories and we are going to drill some wells in the southern part of our block later this year.”

Eni and Total SA have secured the latest four exploration licenses off Kenya, according to the companies. Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil producer, in 2006 drilled the deepest Kenyan offshore well as of 2011, which failed to find oil or gas.

Most oil companies prefer to find crude oil reserves rather than natural gas because it’s cheaper to produce and supply to customers. Crude can be loaded on a tanker and shipped worldwide from remote fields, while gas has to be chilled and liquefied before shipping, what requires higher investment in LNG plants.

“Oil is simpler story,” said Al Stanton, managing director for oil and gas research at RBC Capital Markets. “ Gas is still playing some sort of second figure to oil.”

Friday, August 10th, 2012 4:43pm IST

Apache to start drilling offshore well in Kenya

NAIROBI Aug 10 (Reuters) – U.S. explorer Apache Corp. plans to drill an offshore well off the Kenyan coast soon, company executives said, expanding the search for oil in the east African country that struck oil onshore in March.

East Africa and the Horn of the continent have become hot spots for oil and gas exploration in recent years, spurred by
new finds in countries including Kenya, Uganda, Tanzania and Mozambique.

However, oil companies have yet to make finds offshore.

Apache will drill in an area known as the Mbawa prospect on Block L8 in the Indian Ocean.

“Spudding is imminent,” Barry Rushworth, CEO of Pancontinental Oil and Gas, one of Apache’s partners with a stake in the block, said in an email to Reuters.

Apache, the operator in the block, is partnered by British firm Tullow Oil, which made Kenya’s onshore discovery this March, and Australian firms Origin Energy and Pancontinental.

Tullow has placed the odds of the well’s success at 15 percent, while Pancontinental has estimated the well could contain as much as 4.9 billion barrels of oil.

In 2007, Australia’s Woodside Petroleum drilled Kenya’s last offshore well at a cost of nearly $100 million, but found no oil deposits and paid the government to exit from a contract that had required the firm to drill a second well.

Apache said in July it had taken special precaution to ensure the operation goes smoothly. It has enlisted the Kenyan
Navy to protect the drillship from pirates who have been hijacking ships in the Indian Ocean for ransom.

The well is expected to take 60 days to complete and reach 3,250 metres below the sea in water depth of 860 metres.

“The main concern that we have with regard to security is the potential for piracy, and with that regard, we have partnered with the navy,” said Tim Gilblom, managing director of Apache Kenya.

PCL - We are Drilling - Pancontinental Oil & Gas

Apache Starts Searching for Oil Offshore Kenya

Posted on Aug 13th, 2012 with tags Apache, Deepsea Metro 1, Mbawa, News, Offshore Kenya, Oil, Searching, starts .

Apache Corporation has, on behalf of the L-8 consortium, spudded Mbawa exploration well offshore Kenya.

The Mbawa 1 exploration well spudded at 6:00 hours local time on 10 August 2012.

Mbawa 1 is located in the Mbawa Prospect in offshore Kenya. The modern drillship Deepsea Metro 1 is expected to take about 60 days for this drilling operation, which will reach a total depth of 3,250m subsea in a water depth of 864m.

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.

While offshore East Africa has the potential to become one of the world’s foremost LNG producing regions, it has been predicted that in the northern part of the East African margin offshore Kenya will prove to be oil-prone rather than gas-prone.

Pancontinental, which owns a 15% stake in the joint venture, estimates that the Mbawa Prospect has potential to contain more than 4.9 Billion Barrels of oil.

Oil search at the Indian Ocean gets underway

Oil search at the Indian Ocean gets underway
Tuesday, 14 August 2012 00:05 BY SOLOMON KIRIMI

US oil and gas explorers Apache Corporation estimates that within the next 60 days, it will have drilled the targeted 3,250 metres depth at the exploratory well at Mbawa1 Prospect in the offshore block L8 well within Lamu basin. Apache has already drilled 1519 metres below the drill floor since the exercise started on 10th August 2012. The exercise and now the actual drilling is on hold as the company carries out more preparations for safe drilling known as casing.

The drillship, Deepsea Metro 1, is working from 864 metres water depth above the drilling floor. L8 block Mbawa well is a joint venture between Apache Kenya with 50 per cent share which is also the operator, while Origin of Australia owns 20 per cent, Tullow oil, the British based company that struck potentially major oil find in Turkana owns 15 per cent. Pancontinental Oil & gas also from Australia holds 15 per cent. “We are pleased that the L8 joint venture has commenced drilling Mbawa which is the first of a number of prospects that we have in our Kenyan projects,” Pancontinetal’s chief executive Barry Rushworth said in an announcement to the Australian Securities Exchange.

“The economics of oil developments are far better than those of gas with potential for much earlier cash flow and much lower costs”. Pancontinental will initially retain a 15 per cent interest in L8, from which Tullow will have an option to earn a further 5 per cent by funding Pancontinental's share of any second well to a maximum of six million dollars.

Rushworth said they are in a very aggressive exploration programme that will include its other blocks in Kenyan, block L10A and L10B. The company has four blocks off the Kenyan coast covering 18,000 square kilometers with Mbawa1 as the first to be drilled. Mbawa Prospect has been described as a world-class potential for oil and gas with volumetric potential easily exceeding one billion barrels of oil.

Tullow has placed the odds of the well's success at 15 per cent, while Pancontinental has estimated the well could contain as much as 4.9 billion barrels of oil. The East African oil and gas exploration activities have increased dramatically in the last two years following discovery of huge gas deposits in Tanzania and Mozambique, oil in western Uganda and high prospects in Northern Kenya. Both Uganda and Kenyan oil finds were by Tullow oil, which so far has had success in its first attempts at drilling in the region.

http://www.the-star.co.ke/business/local/89517-oil-search-at-the-coast-get-underway-

24 August 2012 MBAWA DRILLING UPDATE

● First casing set at 1,503m
● Current drill depth is 2,005m

KENYA L8 MBAWA DRILLING

Pancontinental Oil & Gas NL (“Pancontinental”) is pleased to announce that the first casing string in the Mbawa well has been set at 1,503m RT (below the drill floor). Drilling has continued below the first casing and the depth of the well at 10:00 AEST was 2,005m RT. Operations are continuing according to the drilling plan.

The drillship Deepsea Metro 1 is expected to spend a total of about 60 days for well operations to reach a total depth of 3,250m subsea in a water depth of 864m, easily within the range of modern exploration and production techniques.

Additional information about Mbawa is available in previous reports issued by Pancontinental and available on the company’s website www.pancon.com.au

Hopes high as two firms triple oil estimates for Kenya at key blocks

Hopes high as two firms triple oil estimates for Kenya at key blocks.

Nairobi: Canadian oil exploration company Africa Oil Corporation has almost tripled its estimates of quantities of oil that that the blocks it is prospecting at contain, raising fresh hope that Kenya has commercially viable quantities. In a report released on Wednesday following its latest independent assessment by Gaffney Cline & Associates, the firm says the recent discovery of oil has resulted in a considerable increase in the geological chance of success assigned to numerous prospects and leads, most notably in Lokichar sub-basin in Turkana.

The firm is prospecting at six oil blocks, accounting for about 12 per cent of Kenya's 47 oil blocks.

"Gaffney Cline's independent assessment confirms the enormous resource potential for our East Africa onshore acreage. The investment to date in our exploration programme has yielded good results, showing a considerable increase in the prospective resources assigned to a growing number of leads and prospects," said Mr Keith Hill, Africa Oil's president and chief executive officer.

The country is still waiting for an assessment of the oil found in Ngamia-1 well in March to know if it will become an oil producer.

Africa Oil Corporation and UK Company Tullow Oil Plc jointly own the well.

The firm says that according to recent studies, there is a possibility that Kenya could strike more oil than earlier anticipated.

According to a research note by Citi, the company (Africa Oil) has increased its overall prospective resource base to 9.3 billion barrels, up from 3.7 billion barrels it had earlier estimated for its total blocks.

In the new estimates, Block 10BA ”” which the company jointly operates with Tullow Oil ”” will contain the largest resource estimates, with a total 4.9 billion barrels, up from 1.1 billion barrels that were earlier estimated.

"This highlights what is believed to be the sweet spot in the tertiary rift play through Kenya and Ethiopia and is likely to be targeted in 2013," read the Citi research note.

Although drilling activity at the Ngamia-1 well was suspended mid this year as a result of an encounter with an unexpected geological formation, the assessment predicts that the well could contain 188 million barrels of oil.

But further appraisal activity will be required to establish the full potential of the discovery.

The announcement comes days after the company, together with Tullow Oil, commenced drilling of its second well at Twiga South-1, located 22km north of Ngamia-1. Plans are underway to move a second rig from Mombasa to the northern part of the country to commence drilling at Paipai by September.

http://www.nation.co.ke/business/news/-/1006/1485952/-/3d1s8bz/-/index.html

Hi Smalltimer,

I'm interested in PCL's progress through FAR at present (the old nearology concept). Just as PCL dropped late in the week, so did FAR. I play the Buy Early Sell Before Spud (BESBS) game so find the FAR entry price quite appealing at present. If PCL hit the jackpot, I'll be happy as it will rub off a little on FAR and their future drilling prospects in Africa. If PCL is a duster, then I'll take this as a FAR buying opportunity. In this market, 12 month prospects (as BESBSs) have worked for me in the past. While I didn't have any PCL in my own name, I recently sold 2 parcels for relatives using the BESBS models. Managed to get out at 18c and both made well over 200% profit (50% CGT free as they'd held them for nearly 2 years) but this will pale into insignificance if PCL hit oil here!

All the best with PCL and hopefully you'll have a Hardmans success on your hands here.

Cheers,
BESBS

(Market did not like the report issued today, at one stage dropped to $0.099. Now up a bit at 11 cents but a far cry from yesterdays close at 16 cents and their all time high of 24 cents. Never mind, we are still in with a chance all be it a very slim one now).

Mbawa Well Drilling Continues Offshore Kenya
Posted on Sep 3rd, 2012

Pancontinental Oil & Gas NL has announced the Mbawa well, located in Block L8 offshore Kenya, has reached a depth of 2,553m RT (below the drill floor).

The Mbawa well operator, Apache Corporation, has advised Pancontinental that between the last casing set at 1997.53m RT and the current depth of 2553m RT elevated mud gas readings have been seen during some of the drilling. Wireline logs are being run before drilling proceeds further. The significance of the elevated gas readings will not be known until wireline logs have been run and an evaluation has been made.

Operations are continuing according to the drilling plan. The secondary exploration target is deeper than the current drill depth and it is anticipated that this will be penetrated once the current wireline logs have been run and drilling has recommenced. The planned Total Depth of the well is 3,275m.

The drillship Deepsea Metro 1, operated by Apache, is expected to spend a total of about 60 days for well operations.

Pancontinental, which owns a 15% stake in the joint venture, estimates that the Mbawa Prospect has potential to contain more than 4.9 Billion Barrels of oil.

Pancontinental requests trading halt ahead of Mbawa well announcement
06 Sep 2012

Pancontinental Oil & Gas has requested a trading halt ahead of an announcement regarding its Mbawa well being drilled offshore Kenya. Pancontinental has requested the trading halt remains in place until the earlier of commencement of trading on September 10 or Pancontinental making an announcement to the market concerning the Mbawa well.

On September 3, Pancontinental issued the following update regarding the Apache-operated Mbawa well being drilled in Kenya offshore Block L8.

Is it there? Good luck guys - PCL - Pancontinental Oil & Gas

Hang on to your hats guys, rumors have it that PCL(Apache) have struck
the black stuff in Kenya.
********************************
Possible oil find at Mbawa well
Posted Saturday, September 8 2012 at 16:27

In Summary

The company is set to make a major announcement on the status of the Mbawa well in the coming days, an expectation which made it request the stock exchange to halt trading its shares until September 10.
Pancontinental owns 15 per cent of block L8 in Kenya, and its joint venture partners are Apache (50 per cent), Origin Energy (20 per cent) and Tullow Oil (15 per cent).

Earlier last week, Pancontinental said elevated mud gas readings had been seen during drilling of Mbawa, which shows that the well could contain hydrocarbon reserves.
Mbawa is estimated to contain a mean resource value of 200 million-300 million barrels, according to Apache.

Optimism is growing that a significant oil discovery could be in the offing in Kenya’s Mbawa well off the Indian Ocean coast after Australia’s Pancontinental Oil & Gas requested a trading halt at the Australian Securities Exchange.

The company is set to make a major announcement on the status of the Mbawa well in the coming days, an expectation which made it request the stock exchange to halt trading its shares until September 10.

Pancontinental owns 15 per cent of block L8 in Kenya, and its joint venture partners are Apache (50 per cent), Origin Energy (20 per cent) and Tullow Oil (15 per cent).

Earlier last week, Pancontinental said elevated mud gas readings had been seen during drilling of Mbawa, which shows that the well could contain hydrocarbon reserves.

Mbawa is estimated to contain a mean resource value of 200 million-300 million barrels, according to Apache.

Analysts have said an oil discovery at Mbawa would substantially increase the attractiveness of the Kenyan coast to explorers and investors, which has witnessed a surge in oil and gas exploration activity since Tullow struck oil in the northern Turkana region in March.

Tullow oil is expected to drill three more wells in Kenya this year. Analysts at Jefferies research group say the firm will drill Twiga South and North wells this quarter while it is expected to drill the Paipai well in the fourth quarter of the year.

Another Australian company, Woodside Petroleum spent $100 million in 2007 to drill Kenya’s first offshore well on the L5 block situated in the Lamu basin but the well turned out to be dry.

Mbawa sits in the Lamu Basin which extends offshore Kenya, and has generated considerable interest particularly after successive gas discoveries to off the coast of Tanzania and Mozambique which share the same geological characteristic with the Kenyan coast.

However, despite the gas discoveries in the two countries, the oil exploration firms believe the Kenyan coast could yield oil.

“While other locations are proving to be ‘gas prone’ along the East African margin, Pancontinental believes there is an extensive oil prone ‘sweet spot’ offshore Kenya,” the company said in a statement last month.

Hey ST. My thoughts are that that article is based upon nothing more than last weeks announcement and old information.

Saying that, I'm still hoping for something positive tomorrow...... I'm just not too hopeful at this stage.