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Although yesterday's RNS regarding the Uruguay settlement is welcome news there are still several important issues to be resolved before OMI's interests can be progressed under the Orosur-Newmost ANZA Exploration Agreement of 7th Sept 2018. I have detailed these issues in several previous posts, the last on 07.08.2019, and as they remain relevant, reiterate them here for the benefit of more recent investors.

Section 8g, page 16, of the Orosur-Newmont Agreement, defines a process for integration of all the Concessions relating to the ANZA area to ensure synchronicity for the purpose of mineral exploration. This process requires the authority of ANM (Agencia National de Mineria) and cannot proceed until Minera Anza (=Orosur) has acquired those Concessions.

Of the 6 Concessions covering the ANZA region Orosur has title to 3 (2 exploration permits and 1 integrated exploration and exploitation permit with granted environmental license) including under the integrated permit most of the southern targets of APTA, Charrascala and Guaimarala, constituting 10,615 hectares in total, approximately half of the ANZA region. The other half of ANZA, including the extensive La Cejita and most of Jesuitas targets, is subject to ongoing open application, so Orosur does not as yet have title to half of the ANZA region. This is reconfirmed on page 15 of the latest Annual Information Form (for year ended 31.05,2019) submitted to SEDAR on 03.09.2019.

Furthermore parts of the ANZA region are subject to an ongoing environment assessment for possible designation as protected TDF “Tropical Dry Forest” and although such designation would not necessarily exclude mining it appears to be a factor in the, so far, lengthy process by which ANM are considering the three outstanding Concession applications.

To be continued

Zebediah16 if you view the August 28th aerial view tweet, production piping is clearly visible adjacent to the road in the opening sequence with an extension alongside the C-37 mud-pit equally apparent at the end of the video.
Most if not all of the Jafarli wells are connected to a grid of transit pipes so tanker transport is, I believe, not an issue.

The recent (RNS 08.09.2019) update re C-37 provides very encouraging prospects for enhanced production from the M Eocene of the Jafarli Field and for possible future development of the Upper Cretaceous carbonates across ZEN's acreage. Whilst we await further news, I thought it opportune to review some of the factors which will have a bearing on the all-important M Eocene flow rates.

C-37 is located on the E flank of a dome-shaped structure in which the 800m thick Palaeocene/Eocene sequence is draped over the underlying Cretaceous age 'structural high'. From comparison of the logs for C-22 ( c425m S of C-37), for C-26 (c375m E of C-37), with that of C-37, I conclude that a N-S or NE-SW trending normal fault with a vertical displacement of c400m to the W, divides C-26 from both C-37 and C-22. A plan of the Jafarli Field well locations can be found on page 296 of the Chapman Engineering CPR Appendix to the ZEN Prospectus of 05.01.2017.

As C-26 is E of this fault, the 70bopd flow rate achieved from a 10m M Eocene pay zone in September 2017 (ref RNS 07.09.2017) will have been determined by reservoir factors largely independent of those which will influence the C-37 flow rate. The C-26 M Eocene reservoir is c400m structurally higher.

C-37 and C-22 are c300m or less W of the fault and the M Eocene reservoir is down-faulted c400m relative to the C-26 reservoir. C-22, as we know “achieved a sustained rate of production of approximately 700 barrels per day from the interval between 3902-4014m.” (ref RNS 18.07.2019) Note those depth figures must span the Middle/Upper Eocene boundary but the bulk of the pay zone was in the Middle Eocene. Chapman gives the total production from C-22 as 570,000STB (Stock Tank Barrel). Chapman also includes a well number 5, c375m N of C-37 and therefore within 300m of the fault, with 468,000STB cumulative production presumably also from the M Eocene. As C-37 is midway between C-22 and well 5 the probability of common reservoir properties and therefore comparable flow rates and cumulative production is considerably enhanced. It is not possible to offer a predictive flow rate for C-37 from this assessment although the factors outlined support the indications from ZEN's news releases of a significant flow rate.

It is also worth noting that the well-logs for C-30 (c500m W of C-37), the next drill target, indicate that the M Eocene reservoir at that point is up-dip from C-37 and C-22 by an elevation of 50-100m, in agreement with AC's assertion, so a positive factor in the potential production for C-30 also.

I will await results of the wireline-logs from the U Cretaceous before offering comment on that aspect of the C-37 results.
AGEOS.

With regard to yesterday's and today's wireline logging tweets I'm inclined to agree with Ezhik (yesterday's post at 08.26) that the chief objective must be the newly drilled Middle Eocene section. The well was wire-logged in January down to the then TD and the current TD can only be just below the M Eocene.
Mike Palmer when COO of Zenith Aran in 2017 was greatly impressed with Roke's Quad Neutron technology when applied to C-21 and C-26 in the Jafarli Field as this identified several producing horizons in the M Eocene missed by more conventional well logging techniques. Although designed for integration into BHO drill-string assemblies it appears to be also employed in wireline units and as Roke now have an operational unit in Baku I would not be surprised if it is being applied to C-37.
AGEOS

Bear666 Yes, maybe some news arising from the last tweet?

Interestingly, Augusto Rossato is not using a polarising microscope, the usual petrological microscope used for examining rock thin-sections, he appears to be using a low power stereomicroscope with UV light (note the UV glow beneath his right hand) . That plus the white 'sample-dish' also beneath his right hand indicates he is examining cuttings for hydrocarbon traces.
Cuttings are examined under UV light for visible fluorescence indicative of a range of hydrocarbons and are then placed in solvents in the sample dish and re-examined for fluorescent traces leaching into the solvent.
Cutting samples will have been taken throughout the M Eocene so they will soon have some indication of hydrocarbon distribution in their first target..
AGEOS

Alan2017 You appear to have drawn invalid conclusions from the ZEN website 2019 Investor Presentation regarding C-37 Production Tests.
Slide 08 under 'Plan of Action' states:
2. “Deepen well c-37's total depth, 3987m, by 15-20m into the Middle Eocene formation and subsequently perform a production test.” Note use of the word 'subsequently' which does not commit to a specific time such as 'immediately following the drilling.
3. “Following the completion of drilling activities in the Middle Eocene formation target zone, Zenith will proceed with deepening well c-37 by approx 200-250m to penetrate the Upper Cretaceous formation and test the fluid content of this new, unexploited structure.”

Note, there is no further mention anywhere in this Presentation of production tests at C-37 and as the 18.07.2019 RNS states that “upon completion of deepening activities, a series of wireline activities and production tests will be performed first in the Upper Cretaceous and later in the Eocene clastic sequence” (Quoted and enlarged upon in my post of 01.09.2019.) I assume it is safe to conclude that this is the plan of action at C-37. Hence there is no intention to conduct production tests at this stage ie completion of drilling the first target, the Middle Eocene (30-40m thickness).
If you have published evidence to the contrary then please post it but with a clear distinction between what is printed, in inverted commas, and not your interpretation or re-hash of what has been printed.
AGEOS

SEA7, the term 'structural complexity' refers mainly to “the 3D spatial disposition of strata and other lithologically distinct units” so when I describe ZEN's acreage as 'structurally relatively simple' that has no direct relevance to the success or otherwise of the workover and other activities to date. The factors which have determined the various outcomes; partial success at C-21 & C-26, temporary suspension at Z-21, abandonment and failure at others; are many and complex but have nothing to do with 'structural complexity' and its understanding. I have been tempted to post explanations of some of those factors but will continue to refrain from doing so as it inevitably leads to lengthy geotechnical screeds.
Hope this is of some use at least.
AGEOS

Contrary to what is claimed, the geological challenges for BLOE in its Rustavi, Norio and Satskenisi interests are far greater than those with which ZEN has to contend in Azer. The difference is primarily that of structural complexity which is extreme in the Norio-Satskenisi area but less so in Rustavi, although as 16aZ has revealed, even that has what may be complex shear-zones previously interpreted as normal faults. ZEN's acreage, on the other hand, is structurally relatively simple and well-understood, which significantly reduces the risks in targetting potential reservoirs.

The other major geological variable, that of lithology, which is the main determinant of potential reservoir properties, is also more favourable in ZEN's acreage as is evidenced by the history of prolific oil production. Although the U Cretaceous volcanics at Muradkhanli have been the main producers to date, there remains huge production potential in the M Eocene, the siliciclastics and carbonates of shallower Miocene and Pliocene targets, and the recently identified U Cretaceous carbonates.
AGEOS

Thanks for the responses and appreciation. The BOP is 5000psi capacity if I recall correctly but bear in mind that hydrostatic pressure decreases rapidly up the fluid column so 6000psi at TD doesn't mean 6000psi at the BOP.

With regard to the Upper Cretaceous carbonate structure since there is no reference to drilling through the carbonates into the presumed underlying volcanics, I assume that the carbonates must have been inferred from the 3D seismic to be somewhere between 150-200m in thickness at C-37.

This is based on the TD of 3987m at start of drilling plus 40m to base of Middle Eocene, an absence of Lower Eocene as shown in cross-sections through the Jafarli Field, plus approximately 100m for the Palaeocene marls, ie 4127m to the Palaeocene/Upper Cretaceous interface. If as stated in the 18.07.19 RNS the intention is to drill “250-300m from the base of the M Eocene” then TD will be 150-200m into the U Cretaceous and presumably still within the carbonate structure. From the reservoir engineering standpoint it would be unwise to drill speculatively into the underlying volcanics.

So with a carbonate thickness of 150-200m at C-37, my 14.06.19 approximation of 47.175MMbbl potential hydrocarbons based on 5% porosity for a structure extending over 3sq km area and at 100m maximum thickness tapering to zero at the margins, remains intact if not conservative. However it is important to appreciate this is a theoretical maximum with many possible restraints, and any potential has to be translated into recoverable reserves.
AGEOS.

As twitter and RNS evidence appears to indicate, drilling began on or sometime prior to August 22nd and continued for an unspecified period before drill-string re-run-in on the 28th and re-commencement of drilling on the 29th. That, as we have surmised, suggests that the 30-40m of M Eocene beyond the original 3987m TD has been drilled and possibly cored, followed by reassembly of the BHA (Bottom Hole Assembly) and change of drill-bit prior to the second run-in. According to the 18.07.19 RNS we are therefore now at the start of the additional 250-300m deepening phase intended to test an inferred U Cretaceous carbonate structure.

As I have previously posted, the Lower Eocene does not extend over the Jafarli high, so the drill-bit should now be entering the c100m thick Palaeocene marls, probably a clay/clastic weakly-consolidated lithology which is unlikely to be cored and will be circulated out into the surface mud-pit relatively quickly. When the data feeds from the BHA instrumentation indicate drill-bit proximity to the anticipated marl-carbonate interface, drilling will proceed more slowly and with enhanced caution. If the intention is to core the carbonates, the drill-string will have to be withdrawn to change drill-bit and then re-run.

Drill progression from a presumed impermeable marl capping into a carbonate hydrodynamically closed system with anticipated high porosity and permeability will demand maximum BHA data-feed and operational control at surface. I have posted previously that bottom-hole hydrostatic pressure at TD would with a normal pressure gradient be around 4500psi but in a closed system such as this could be anywhere up to 6000psi, or even higher with exceptional parameters, which is why they tweeted that view of a BOP installed on a shiny new wellhead. With the c120C temperature calculated for the U Cretaceous at c4000m by Gadanov, this is within the range for long- to short-chain thermogenesis of hydrocarbon molecules with consequent 2- to 3-fold volume increase and associated enhanced hydrostatic pressure. That plus the potential for additional pore-pressure increase from tectonic compression, a significant factor in the region, will be uppermost in the minds of the operational engineers as the drill-bit enters the U Cretaceous.

The 18.07.19 RNS states that “upon completion of deepening activities, a series of wireline acquisitions and production tests will be performed first in the Upper Cretaceous carbonates and later in the Eocene clastic sequence”. As “well deepening is expected to be completed during approximately 30 days” that implies wireline and production tests commencing around 23rd September. We can speculate on what that entails at that time but in the meantime we should continue to receive various hints on progress and prospects from the twitter feed and presumably an end of deepening RNS.
AGEOS.

The vertical stack of 'triples' has now been fully deployed downhole and we appear to be now using the 'singles' so my guess is we are now drilling beyond the first target ie M Eocene, into the Palaeocene, on the final 200-250m leg towards the U Cretaceous.

Ezhik, I agree entirely with your conclusions. Also having zoomed in on the rig mast assembly I can confirm there are 40-50 stands of pipe in the vertical stack and during the course of the video the top-drive assembly moves down several metres so they are probably running back in and over half way through the process.

Yes Zebediah, the vertical stack would need 134 stands of 30m drill-pipe to get to 4000m which is not much more than 1sq m of stack-area. The video shows some reserve drill-piping on the ground presumably for the 200-250m drill down to the U Cretaceous target.

Volume in the tubing stack suggests they have drilled the first target and withdrawn the drill-string to presumably recover M Eocene cores and/or change drill-bit.

Agree with you Ezhik on your tweet re-analysis and likely time-scale for the drilling to TD especially if they core some sections as AC implied in his last interview.
This prompts me to add that the 22.10.18 RNS reference to this Jafarli structure as having “a significant degree of closure indicated by a thickness of approx 100m”, a wording which I always thought rather odd, is perhaps due to poor translation a reference to the structure being “a carbonate structure enclosed by the overlying 100m thick Palaeocene marls”. On that assumption the drilling out of the Palaeocene into the Cretaceous will have to proceed on maximum alert for abnormal high pressures.
The anticipated TD of c4270-4320m would with a normal pressure gradient encounter a bottom-hole hydrostatic pressure of around 4500psi but if this is an enclosed system could be anywhere up to 6000psi, given that the lithostatic pressure at that depth could be c11000psi based on the largely sedimentary overburden. Obviously an abnormally high bottom-hole and formation pressure requires extreme caution so we might be in for some very interesting tweets later on in the process.
AGEOS

Bhads, thanks for your response. To answer your question I suggest you download the “2019 Investor Presentation” from the ZEN website home page and scroll down to slide 10. This is a vertical section along a line which runs approximately NW-SE (from M-38 to the near-vertical fault [red dashed line] beyond M-205) and from that fault turns to run NE via M-23 and M-24. Scroll back to slide 05 and envisage the line of section as running from the left hand margin of the 3D seismic grid through the lilac-coloured area to the bottom right-hand corner and then turning 90 degrees NE along the NW edge of the Jafarli Field.

Returning to slide 10, the northern limit of the U Cretaceous carbonate C-37 & C-30 target probably extends to the uppermost few metres of what is labelled near the right-hand margin of this section, as “Upper Cretaceous Volcanics”, and thickens southwards to the c100m maximum thickness centred on the Jafarli palaeo-topographic high. As the U Cret Jafarli carbonate is described as occupying “3 sq km” it no doubt thins rapidly to the S and is probably cut off to E and W by faults, that to the W being a continuation of the fault shown in slide 10. Slide 09, incidentally, indicates several low-angle thrust faults displacing the Jafarli U Cretaceous carbonate target, implying that it also has its own internal structural complexity.

Finally, and to answer your question, slide 10 shows a continuation of “U Cretaceous Carbonates”westwards but down-thrown 250m+ beyond the Jafarli Field boundary fault. Appraisal well, ZEN-01 will target part of this western extension of the U Cret carbonates hence the stated importance of C-37 and C-30 as having important implications for prospective production elsewhere in ZEN's acreage.

Hope this helps clarify an otherwise complex aspect of the geology.
AGEOS.

The RNS dated 22.10.2018 which outlined the Jafarli U Cretaceous carbonate target for the first time, stated “the Company has calculated the reserves potential of this structure by hypothesizing certain petrophysical parameters expressed in similar Cretaceous reservoirs located in the north-western part of the Kura basin.”

I have, in subsequent posts, 07.05.19, 14.06.19 & 18.07.19, enlarged on the possible implications of such a comparison mainly in terms of the theoretical production potential, the validity or otherwise of which will be proved by the drill-bit and subsequent tests within the next few weeks.

I have also indicated in several posts that the REDPSA Agreement with SOCAR facilitates cooperation in geotechnical expertise as evidenced by the work of Salmanov and Gadirov specifically on the ZEN acreage. With regard to the U Cretaceous carbonate prospects there is also work by the SOCAR geochemist Akhundov, published in Russian, which although based on the Tarsdallar Field, a Middle Eocene producer, has indicated potential productivity also from the Cretaceous. The criteria he identifies probably contribute to the 'petrophysical parameters' referred to in the ZEN RNS and include a geothermal gradient of 100 C+ at Tarsdallar.

The Jafarli U Cretaceous carbonates appear from Gadirov's study to be in excess of 119 C so well within Akhundov's preferred thermocatalytic zone, which together with the gravimetric and magnetometric anomalies also identified by Gadirov at Jafarli, all support a favourable prospect. With this degree of geotech research support from SOCAR plus the appointment of Dr Narmina Garayeva (Prof Geneva Business School; Azer Oil & Gas Field specialist) as head of Reservoir Engineering, and the geologists Dr Augusto Rossato and Dr Piero Casero plus Eldar Hasanov a specialist in Russian log analysis, AC has built a very impressive geotechnical base.

Hopefully that will soon be reflected in drill results.
AGEOS.

Very reassuring to see the Geolog Baku-based mud-logging specialists on-site and, from an earlier video, delivery of a sizeable field/lab unit. Suggests a comprehensive reservoir evaluation and drill-monitoring service has been commissioned in expectation of serious potential production.
Presumably the priorities will include real-time monitoring of permeability characteristics,(primary matrix and secondary fracture) derived from high resolution flow-meter data, and real-time measures of TOC (Total Organic Carbon) from cuttings and core-chips, when and where the latter is employed. Maybe they will also include a full geo-chem analysis of cuttings and core-chips to complete the picture as that field-lab looks large enough to house the x-ray equipment and specialists required.
Exciting times and hopefully generous production rates ahead!
AGEOS

Whilst the recent surge in SP is perhaps largely attributable to the increase in gold-price, there are aspects of the Orosur-Newmont ANZA Exploration Agreement of 7th Sept 2018 which appear not to have been taken into account judging from their absence from recent postings on this BB. I have covered them in detail in previous posts, referenced here to my posting history; the most important aspects being as follows:

Section 8g, page 16, of the Agreement, defines a process for integration of all the Concessions relating to the ANZA area to ensure synchronicity for the purpose of mineral exploration. This process requires the authority of ANM (Agencia National de Mineria) and cannot proceed until Minera Anza (=Orosur) has acquired those Concessions. Of the Concessions covering the ANZA region Orosur has title to those including most of the southern targets of APTA, Charrascala and Guaimarala, constituting 10,615 hectares, approximately half of the ANZA region. The other half of ANZA, including the extensive La Cejita and most of Jesuitas targets, is subject to ongoing open application, so Orosur does not as yet have title to half of the ANZA region.

Furthermore parts of the ANZA region are subject to an ongoing environment assessment for possible designation as National Park and although such designation would not necessarily exclude mining it appears to be a factor in the, so far, lengthy process by which ANM are considering the three outstanding Concession applications.

As the Environmental Assessment period was extended last year until Oct 2019 it is possible that all will be resolved later this year but until the outstanding Concessions are granted and the integration process completed, developments in tha ANZA-wide region appear severely constrained.
For further details see posts dated 07.02.2019 re ANZA Future Drilling & 12.03.2019 re N 43-101 Amended Tech Report.
For those wishing to understand the gold mineralisation at APTA and elsewhere in the region my posts from 13.10 2018 re APTA Au Resource, onwards, may be of interest.
AGEOS.

AJB, thanks for your considered and revelatory response. It appears that you have discovered a causal relationship between the decision making capabilities of a CEO and a multitude of geophysical parameters which determine the production of oil from a pre-existing well such that the latter can be said to be the direct responsibility of the former.

It is possible that you are unaware of the significance of this discovery so I suggest you explain the causal process in a series of logical consecutions which I can then submit to the President of the Geol Soc with my recommendation that you be invited to present your thesis to the profession in a special meeting at Burlington House.

I can assure you that the magnitude of your apparent discovery will not only elevate you to the intellectual heights of the geosciences but due to the inference of a previously unknown physical force inherent in your theory, require modification of the Standard Model for universal physics, a consequence which would certainly gain you a Nobel Prize.
AGEOS