http://www.proactiveinvestors.co.uk/columns/fox-davies-capital/4489/african-aura-miningchaarat-gold-cove-energy-exillon-energy-and-others-feature-in-fox-davies-capital-newsflash-4489.html
http://www.proactiveinvestors.co.uk/companies/news/25295/bowleven-shares-broadly-unmoved-by-sapele-1-exploration-well-disappointment-25295.html
BowLeven shares broadly unmoved by Sapele-1 exploration well disappointment
BowLeven shares broadly unmoved by Sapele-1 exploration well disappointment
BowLeven’s (LON:BLVN) announcement that the Sapele-1 exploration well in the Douala Basin, offshore Cameroon, was halted due to technical problems only saw a neutral reaction by the market and brokers this morning.
While the stock initially reacted with a slight fall, by late morning it was trading just above the opening level at 358 pence.
The company said Sapele-1 was drilled to a total depth of 4,733 metres. Work was halted due to technical limitations after encountering a high pressure gas reservoir in the Cretaceous. The bottom hole section has been cemented and is now being abandoned in advance of planned appraisal drilling.
In its ‘First Take’ report prior to the market open, Evolution Securities said the failure of the Sapele-1 well to make an outright discovery in the Cretaceous will probably see the shares come off this morning.
“However, the forward plan of appraising the Tertiary discoveries already announced, in what are likely to be in more optimal locations, and the addition of an extra drilling rig from February onwards makes the BowLeven story an attractive one in our view.
“The shares have weakened from 400p earlier this year but we think there will be additional weakness today. We would look to pick them up though around the 320p mark,” Evolution said.
Investment bank Matrix called the news an “overall neutral announcement”.
“After an extended gap since the last announcement, it is hardly surprising to find that the well has encountered some difficulties. It is encouraging (though not really conclusive) that oil has now been interpreted in the shallower Epsilon, but disappointing that the all important Tertiary testing will have to wait for another well. Still, with two rigs operating in the area and the Tertiary and Cretaceous potential now identified, but only just scratched, we maintain our BUY rating,” it said.
Matrix has a 450p target on the stock.
BowLeven’s (LON:BLVN) announcement that the Sapele-1 exploration well in the Douala Basin, offshore Cameroon, was halted due to technical problems only saw a neutral reaction by the market and brokers this morning.
While the stock initially reacted with a slight fall, by late morning it was trading just above the opening level at 358 pence.
The company said Sapele-1 was drilled to a total depth of 4,733 metres. Work was halted due to technical limitations after encountering a high pressure gas reservoir in the Cretaceous. The bottom hole section has been cemented and is now being abandoned in advance of planned appraisal drilling.
In its ‘First Take’ report prior to the market open, Evolution Securities said the failure of the Sapele-1 well to make an outright discovery in the Cretaceous will probably see the shares come off this morning.
“However, the forward plan of appraising the Tertiary discoveries already announced, in what are likely to be in more optimal locations, and the addition of an extra drilling rig from February onwards makes the BowLeven story an attractive one in our view.
“The shares have weakened from 400p earlier this year but we think there will be additional weakness today. We would look to pick them up though around the 320p mark,” Evolution said.
Investment bank Matrix called the news an “overall neutral announcement”.
“After an extended gap since the last announcement, it is hardly surprising to find that the well has encountered some difficulties. It is encouraging (though not really conclusive) that oil has now been interpreted in the shallower Epsilon, but disappointing that the all important Tertiary testing will have to wait for another well. Still, with two rigs operating in the area and the Tertiary and Cretaceous potential now identified, but only just scratched, we maintain our BUY rating,” it said.
Matrix has a 450p target on the stock.
African Aura Mining,Chaarat Gold, Cove Energy, Exillon Energy and others feature in Fox-Davies Capital Newsflash
Bowleven (BUY, £4.50) (LON:BLVN, 357p, ▲ (2.29%)) announced that the Sapele-1 exploration well drilling in the Douala Basin to TD of 4,733m. Drilling was halted due to technical limitations after encountering a high pressure gas reservoir in the Cretaceous. The bottom hole section has been cemented and is now being abandoned in advance of planned appraisal drilling. The Sapele-1 well location was selected to intersect multiple independent exploration targets from the proven Tertiary fairway down to the deeper Cretaceous fairway from a single location. On 10 January 2011, Bowleven advised that further Cretaceous targets had been identified beneath the original planned target depth of the well (4,450m) and the plan was to deepen the well. The well was drilled to a TD of 4,733m before drilling was halted due to a rapid influx of very high pressure gas. Consequently, logging of the interval was not possible and the bottom hole section is being abandoned. Based on an initial analysis of the major step change in pressure encountered and the interpretation of the seismic, it is considered that the well may have encountered a significant hydrocarbon column in the Cretaceous. Further analysis of mudlogging and wireline data, together with gas chromatograph ratio analysis, has confirmed oil shows were encountered within thin sands in the upper part of the Cretaceous Epsilon Complex. Further interpretation and calibration of the well and seismic data is required to assess fully the implications for Cretaceous volumetrics. The Sapele-1 well has further highlighted the significant potential of the Douala Basin, with hydrocarbons encountered in both the Tertiary and Cretaceous fairways. The stratigraphic nature of the Sapele-1 discoveries requires that further evaluation and appraisal is required to establish their scale and commerciality. Accordingly, the next step, subject to approval by the joint venture, is appraisal drilling to delineate the Tertiary discoveries. Due to mechanical issues as a consequence of having to abandon the lower hole section it has been decided to carry out testing in the immediate appraisal well. An extensive drilling programme is being planned for 2011 across the Etinde Permit. As a result, Bowleven has contracted an additional jack-up rig which is expected to be mobilised from towards the end of February 2011.
Comment: The announcement of a deeper discovery is excellent news, although no details are available at this stage that could enable us to put a value on it. The stock having drifted from its recent highs, it is likely to respond well as further details are provided by management in a conference call this afternoon. We continue to believe in the upside potential of the off- and onshore Douala Basin and maintain our recommendation and price target.
Comment: The announcement of a deeper discovery is excellent news, although no details are available at this stage that could enable us to put a value on it. The stock having drifted from its recent highs, it is likely to respond well as further details are provided by management in a conference call this afternoon. We continue to believe in the upside potential of the off- and onshore Douala Basin and maintain our recommendation and price target.
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