Tullow, Africa Oil discover more oil in Northern Kenya

Tullow Oil and Africa oil have announced that they have struck more oil in North Western Kenya at the Amosing 3, Ngamia 5 and Ngamia 6 appraisal wells.

According to Africa Oil Ngamia-5 which is located 500 metres northeast of the Ngamia-1 discovery well in a different fault compartment and encountered 160 to 200 metres net oil pay, which is amongst the highest of all the wells drilled in the basin to date. while Ngamia-6 which is located approximately 800 metres north of Ngamia-1 and in the same fault compartment as Ngamia-5 and encountered up to 135 metres net oil pay.

The two wells which were drilled by the PR Marriott 46 rig have been suspended and one or both will be utilized in an Extended Well Test (EWT) that will commence in the second quarter. Pressure data from the Ngamia-3, 5 and 6 wells demonstrates connectivity between the wells at multiple reservoir horizons, which will be further tested by the EWT.

At the Amosing-3 appraisal well, located 1 kilometre northwest of the Amosing-1 discovery well up to 140 metres of net oil pay was encountered and proved an extension of the field.Pressure data from Amosing-3 indicates connectivity in some reservoir horizons encountered in the Amosing-1, 2 & 2A wells.

“We are very encouraged by the excellent well results from our recent appraisal program at Ngamia and Amosing and we will shortly be commencing Extended Well Tests at both fields, which should further improve reservoir definition,” says Africa Oil CEO Keith Hill.

At the Epir -1 exploration well which was drilled by the Weatherford 804 rig to a total depth of 3,057 metres in the North Kerio Basin in Kenya Block 10BB a 100 metre interval of wet hydrocarbon gas shows was encountered with florescence indicating the presence of an active petroleum system. The exploration well has however been classified as a non-commercial discovery.

The hydrocarbon shows were encountered primarily in rocks which are not of reservoir quality.

“The hydrocarbon shows we have seen in the Kerio Basin are also very encouraging and prove we have a new basin with a working hydrocarbon system. We will be focusing our evaluation on identifying a prospect in that basin with a high chance of a robust trap and better quality reservoirs,” he adds.

The two joint partners say they are encouraged the Epir-1 well has demonstrated a working hydrocarbon system in the Kerio Basin and technical work will now focus on identifying a prospect in the basin where there is a high chance of trapping hydrocarbons in reservoir quality rock.

The Weatherford 804 rig will now be moved to drill the Ekales Deep prospect in Kenya Block 13T, which will test a large prospect in a separate fault block to the east of the Ekales oil discovery in the South Lokichar Basin.

“The Ekales-2 exploratory appraisal well is a bold step-out away from the South Lokichar Basin bounding fault with follow up potential. Continued success in the appraisal of the Ngamia and Amosing oil fields is highly encouraging as we continue with development studies for the South Lokichar Basin,” says Tullow Oil exploration director Angus McCoss.

The PR Marriott 46 rig on the other hand will now move to drill Ngamia-7, which will test a large potential eastern extension of the field identified from the new 3D seismic survey.

The SMP-5 rig has successfully run the Amosing-2A production completion and is currently running the Amosing-1 production completion in preparation for an EWT, where production and injection interference testing will help provide dynamic flow characterization of the Amosing field stacked reservoirs.

Initial production clean-up of both wells will commence around the end of January and data from the EWT should be available in the second quarter. .

Meanwhile acquisition of the large 951 square kilometre 3D seismic survey over the series of significant discoveries along the western basin bounding fault in the South Lokichar Basin has completed and the full fast track processed data set will be available in the next few weeks.

According to the partners initial evaluation of the 3D seismic indicates significantly improved structural and stratigraphic definition and additional prospectivity not evident on the 2D seismic.

In addition an extensive program of detailed core analysis is ongoing after the acquisition of 1,100 metres of whole core from the South Lokichar wells that will better assess oil saturation and to refine the recovery factors of the main reservoir sands as well as provide results from the first quarter onwards.

Hill has also dispelled fears that there will be a slow down in exploration activity in Kenya saying the partners are well positioned to weather the current downturn in oil prices with no debt, primarily discretionary spending and low operating and development costs.

“Our goal in 2015 will be to keep the project moving forward while being financially conservative until oil prices show signs of recovery. We are also working closely with partners and host governments to move the pipeline project forward and resolve remaining tax and fiscal issues in the new pricing environment,” he concluded.

Africa Oil owns a 50% working interest in Kenya Blocks 10BA, 10BB and 13T with Operator Tullow Oil holding the remaining 50%.

Tullow, Africa Oil to drill up to 6 basin openers in Northern Kenya in 2015

Tullow Oil and Africa Oil say they plan to drill 6 basin openers in North Western Kenya’s North Lokichar basin, Kerio basin as well as in North Turkana according to the latest presentation by Africa Oil.

Of the six wells 4 of them are set to spud in Q1 including Epir-1 and Engomo-1 both of which have began drilling in North Kerio and North Turkana while North Samaki and Tausi in North Turkana and North Lokichar are both set to start drilling this quarter.

In South Kerio and the Kerio Valley are however expected to start drilling in mid 2015 and Q3 respectively.
The six basin openers are just some of the over a dozen wells including drill outs and appraisal wells expected in 2015.

The two partners who share Blocks 10BA, 10BB and 13T also plan to have 3 drill outs at Ekales deep, Amosing North and Ekosowan-2.

On the appraisal programme that will target the Lokichar basin results are being awaited on the results of Ngamia-5 and Ngamia-6 appraisal wells the appraisal of Amosing-3 and Ngamia-7 is set for this quarter while that of Amosing-4 is expected in Q2 2015.

Another 5 contingent wells are planned in the second half of 2015 including a possible Twiga-3 and Ngamia-8 as well as two more wells in Block 13T and one in Block 10BB.

The first extended well testing is planned in Amosing and Ngamia in Q1 and Q2 through to Q3 2015 respectively.

Tullow Oil cuts exploration capital expenditure by 80% in 2015 following oil price drop

Tullow Oil has said it will be shrinking its 2015 exploration expenditure capital to just $200 million from $1 billion in 2014 as it takes steps to strengthen the business to adapt to current market conditions.

The company that has exploration and production licenses in West and East Africa adds it will further carry out a review of the business to streamline processes and improve efficiencies which will result in significant long-term cost savings.

The update corresponds with rumors of planned job cuts this week as the company cuts down on expenditure.

The exploration programme Tullow adds will predominately focus on a number of high-impact, low-cost exploration opportunities in East Africa where it has licenses in Kenya and Uganda.

“While this is a challenging time for our sector, Tullow is fortunate to benefit from world-class, low-cost and high-margin assets, strong and growing cash flows and a broad, diversified funding position,” says Tullow Oil CEO Aidan Heavey.

The capital that has been directed elsewhere according to Aidan will be re-allocated towards production assets and the commercialization of existing discoveries which generate significant value and near-term cash flow for the Group.

The company projects to make a $600 million gross profit in 2014 down from $1.4 billion in the previous year with revenues down $400 million to 2.2bn over the same period.

Meanwhile the company has announced that it continues with South Lokichar Exploration and Appraisal programme with drilling recently completed at the Ngamia-5 and Ngamia-6 wells. In addition, the Amosing wells are being prepared for the first Extended Well Test in Kenya.

Elsewhere in the Lokichar basin results are being awaited from the drilling of Epir-1 while the drilling of Engomo-1 well in the Turkana basin has commenced.

The maiden Lekep-1 well testing the Kerio Valley Basin, is expected to be drilled in the second half of 2015 along with multiple appraisal wells in South Lokichar as work progresses on the East Africa development plan.