It’s number 4! Bowleven Strike again on Sapele-1

That’s 4 successful strikes by 4 of the Hotlist Oilies in the first 5 trading days of 2011. Great result.

RNS – 10 January 2011

Bowleven plc (‘Bowleven’ or ‘the Company’)
Further drilling success with Sapele-1 discovery well
Sapele-1 Exploration Well, Block MLHP-5, Etinde Permit, Offshore Cameroon

Bowleven, the West Africa focused oil and gas exploration group traded on AIM, announces that the Sapele-1 exploration well drilling in the Douala Basin, offshore Cameroon has encountered further hydrocarbon-bearing pay in both the Tertiary and Cretaceous objectives based on the results of drilling, wireline logs, samples of reservoir fluid and pressure data.

The well was designed to intersect multiple stacked objectives of Tertiary to Cretaceous age. Wireline log evaluation indicates all of the five objectives to be hydrocarbon-bearing with net pay confirmed in three, based on fluid samples. The well has reached a current total depth (TD) of 4,539 metres and the intention is to set liner and drill onwards, subject to attaining various approvals, on completion of current logging activities.

— All five target objectives indicated to be hydrocarbon-bearing from log evaluation; net pay confirmed in three post sampling.
— Increased oil in-place estimates for Deep Omicron; P90 to P10 now 65 to 430 mmbbls.
— Cross-cut objective encountered 4 metres of log evaluated net hydrocarbon pay.
— Gas condensate encountered in Epsilon Complex validates Cretaceous prospectivity; extends play fairway significantly offshore.
— Further Cretaceous reservoir potential identified; Sapele-1 drilling planned to continue on completion of current logging activities.
— Epsilon Complex volumetrics to be updated following integration and evaluation of extensive well data.
— Preparing for testing and subsequent appraisal drilling/sidetrack activity.
— Group cash at 31 December 2010 circa $190 million; well positioned to fund forward work programme.

Drilling update
The Sapele-1 exploration well location, on block MLHP-5 in the Etinde Permit, was selected to intersect multiple independent exploration targets from the proven Miocene fairway down to the deeper Cretaceous fairway from a single location. This required that a number of the targets be intersected at sub-optimal locations. Consequently, while the well has confirmed the prognosed targets as hydrocarbon-bearing, this is believed to have occurred at the extremities of Lower and Deep Omicron and the Cretaceous Epsilon Complex.

Since the announcement on 25 November 2010, the well, which is drilling in shallow water depths of around 20 metres, has been drilled to a current TD of 4,539 metres and has drilled through the Cross-cut event and into the Cretaceous.

A principal objective of the Sapele-1 well was to prove the concept of the Cretaceous play offshore Douala Basin. The well has now confirmed the presence of reservoir and hydrocarbons in the Cretaceous, offshore Douala Basin, and as a result extends the Cretaceous play fairway significantly offshore.

The updates for these most recent reservoir sections are outlined below:

Cross-cut event
The well has intersected a log evaluated gross hydrocarbon interval of approximately 18 metres in what are believed to be moderate quality interbedded reservoir sands. The provisional net pay is estimated to be approximately 4 metres, with an average porosity of 17%.

Epsilon Complex
The well has intersected a log evaluated gross hydrocarbon interval of approximately 9 metres in moderate to good quality reservoir sands. The Cretaceous net pay encountered to date is estimated to be approximately 4 metres, with an average porosity of 13%. Fluid samples acquired during logging activities confirm the presence of lean gas condensate as reservoir fluid.

It is believed that the well has encountered additional sands at the current TD. Further Cretaceous targets have also been identified and consequently, drilling is planned to continue upon completion of current logging activities.

Initial in place estimates
Following the identification of additional net pay at Deep Omicron Bowleven’s (as operator) in-place volumetrics on a P90 to P10 range have been revised upwards to 65 to 430 mmbbls (updated mean 217 mmbbls). These numbers are subject to ongoing revision following further evaluation and additional appraisal drilling. Due to the stratigraphic nature of the Omicron discoveries, further appraisal will be required and is being planned.

Updated volumetrics for the Epsilon Complex will be generated following completion of the well and the integration and evaluation of the extensive well data acquired.

Sapele-1 forward programme
Wireline logging operations are ongoing over the Cross-cut and Epsilon Complex intervals. Once completed, it is planned to continue drilling, subject to required approvals and agreement with the joint venture partner, further into the Cretaceous. The forward plan will be reviewed by the joint venture on reaching the revised target depth and on completion of logging activities.

Meanwhile, preparations for testing Sapele-1 are underway and any testing will be undertaken once drilling and logging activities are completed. Due to the stratigraphic nature of these discoveries further evaluation and appraisal will be required to determine commerciality. Consequently, planning for sidetrack/appraisal activities is in progress and this activity is expected to commence on completion of the testing programme.

Further update announcements on drilling activities will be made as appropriate.

Financial position
The Group has circa $190 million cash and no debt at the 31 December 2010. This excludes approximately $35 million proceeds anticipated from the disposal of EOV. Consequently, the Group is well funded to carry out the extensive work programme envisaged for 2011 across its acreage.

Kevin Hart, Chief Executive of Bowleven plc, commented:
“2010 has been an exciting year for Bowleven. As we enter 2011 the ground-breaking Sapele-1 exploration well continues to excite and highlights the potential of the Douala Basin. Whilst further evaluation and appraisal are required, the Sapele-1 well has the potential to be transformational. The discovery of oil at Sapele-1 in high quality Miocene reservoirs and in shallow water depths is significant in terms of both acreage-wide prospectivity and potential future development. The Cretaceous result also validates the play within this part of the Douala basin and has potentially significant implications for the overall prospectivity of the Etinde Permit. Furthermore, the Sapele-1 well will have a pivotal role in calibrating and de-risking the multiple exploration prospects identified across Etinde. The momentum is continuing to build in our operations in Cameroon and 2011 promises to be our busiest year yet with an extensive exploration and appraisal programme planned.” END.

What a fantastic result and still more to come. More analysis and broker note comments to follow

2011 Hotlist Results – Week 01

The first week of 2011 got off to a flyer with Nautical’s discovery at Varadero. It got better the next day as Gulf Keystone confirmed their SH-3 Discovery with potential for 2.2blnbls. And on Thursday, MXP delivered a hatrick with the confirmed commercial discovery of Uytas. What a week!

A virtual portfolio has been set up using the 2010 Dec 31st close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. The B list has also been included for comparisons. In the future, I will include several of the newspapers top ten for 2011 to monitor/compare against.

The virtual portfolio’s use the ‘last trade’ system to calculate the days close.
It’s has been a cracking start to the Hotlist – with a week 01 gain of 7.23%. The ‘B’ List came in with a respectable gain of 2.45%.

Click on the Portfolio image to increase size.

2011 Hotlist Week 01
2011 'B' List Week 01

CAZA due to Spud in Mid January.

Worth keeping any eye on Hotlist stock – CAZA. On Dec 21st the company said…

“HOUSTON, TEXAS (Marketwire – December 21, 2010) – Caza Oil & Gas, Inc. (“Caza” or the “Company”) (TSX: CAZ) (AIM: CAZA) has been advised by its drilling contractor Nabors Drilling USA, that the Nabors Rig 4 is continuing operations at its current location longer than anticipated. Site preparations are now substantially complete and Caza is ready to receive the Nabors Rig 4 immediately following its release. Caza will update the market when the Marian Baker #1 well spuds, which is now expected in mid January.” END.

Caza has a 25% working interest before casing point and a 35.94% working interest after casing point in the Marian Baker #1 well with an approximate net revenue interest of 26.24%. MB1 is targeting 350 to 840 billion cubic feet of gas and 35 to 83 million barrels of oil.

Independent Consultants, Isis Petroleum, have reviewed the Amazon and Thames prospects and assessed the Probability of Success for Amazon and Thames at 35%.

Also bear in mind that CAZA are presenting at The Proactive Investors Conference which is on the 13th January. I expect they will give an update on the spud then as ‘mid Jan’ was a broad comment made back in Dec 21st. They may even say that it ‘has’ spudded. Now that would be good timing for the conference.

What’s next for Max Petroleum?

Just one day after reporting a significant discovery on the Uytas exploration well – mxp is already getting final preparations and equipment ready for the next two drills due to start in under 3 weeks.

Next Drilling…
The ALTW-1 exploration well on the West Altykol prospect is expected to spud along with the the ASK-1 well on the Asanketken prospect before 1 February 2011. WA is a Triassic prospect with a 4-way closure and Asanketken is a salt flank Triassic prospect. Both share very similar CoS to the successful Uytas well. ASK-1 is targeting a p50 50mmboe estimate and WA a smaller 13mmboe p50. However, it is worth noting that targets for Uytas were p50 34mmboe. The eventual results showed potential for p50 100mmboe. 3 x the forecasted target. It clearly demonstrates the potential upside in the next two drills.

With two high potential wells due to spud – you would expect the sp to be higher in the coming weeks as anticipation over the next two well’s rises and speculators take positions. At today’s 21.75p it looks like the two next wells are in for free on a risk basis. That’s good value in my opinion.

Several shallow wells are expected to come into production in the first quarter boosting the current average of 2000bopd. Max have not confirmed bopd projections for 2011 and may do so in the coming weeks. Investors should look at the Interim report released in Dec 2010 for a more detailed account of activity in Q1.