Malcy19 Jan 2022 16:46
Advance has provided the following update on the Buffalo-10 well. The Operator, Carnarvon Petroleum Timor, Lda., has advised that, since the last announcement on 14 January 2022, the 9 5/8” casing has been successfully cemented in place and drilling has reached total depth of around 3,415 metres Measured Depth (“MD”) in the 8 ½” hole section.
Observations from Logging While Drilling (“LWD”) tools have identified that the primary reservoir has been intersected, with indications of hydrocarbons as anticipated in the Elang. The top Elang reservoir was intersected at a depth of around 3,338 metres MD, which was approximately 80 metres low to prognosis and outside the pre-drill range of expectations.
The interpretation from the LWD tools and drilling information is that an approximate 12 metre gross oil column was encountered. Wireline logging results will be used to determine the reservoir properties (porosity, net to gross) and to confirm a net oil column.
The information to date indicates that the seismic processing techniques employed on this project have not resolved the underlying seismic velocities or imaging resolution issues that are present in this field.
The Buffalo-10 well is being drilled offshore Timor-Leste in the TL-SO-T 19-14 PSC in which Advance Energy holds a 50% interest.
The update on the drilling of B-10 well and the results are clearly not what was hoped for from this much anticipated well. The drilling operations are ongoing so it’s too early to definitively know what has happened, but the update today indicates that the well clearly encountered a significantly deeper reservoir than was expected. The principal challenge with the field was choosing the well location based on the field’s production history and the seismic data.
The JV will likely run further testing activities, including logging to get a picture of exactly what has happened and will provide an update in due course, however the market reaction clearly indicates that this is a very disappointing result for Advance.
Despite the disappointment, Advance remains a high-quality team with a strong industry reputation and, within the Interim results issued yesterday, they acknowledged the inherent risks associated with all drilling activities, but more importantly it provided an update that the team is actively progressing a pipeline of compelling business development opportunities which, if they come to fruition, can reinvigorate the story. And as demonstrated by the recent Savannah deal, the right teams are able to access highly value accretive deals with limited equity financing required.
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