Member Info for KeithOz

I echo the view that there is no place on this board for posting Russian propaganda, which has already been widely discredited (thanks Bob for the link). fyi, Ihor Kolomoisky, whom your "informants" claim is financing Zelenskyy, is well known to be a friend of Putin. Filtered.

This just popped up on ECO. Didn't see the original NH post because I have filtered him, but clearly, we are not alone in our view :-)

ECO board, Radioheaven Sat 11.04. " "NH: You are not thinking of immense drilling costs ..." , Nigelhaemoglin is a perfect example of a clueless, newbie shorter who has popped up, looking for a bargain. Wells in 3B/4B first will be free carry. There will be NO cost to ECO. DYOR, because you clearly haven't done the basics."

@Petermac. I'm afraid I have to agree. The only reason you would buy now rather than later is 1/. They are just about to expire (they're not) or 2/. If you want to reduce your risk by selling some or all into a pre-results rise. The fact that the recent exercises have been by advisors & ex-directors does not give me cause for concern - but if Paul or Lonny were to exercise now, I would be out like a shot.

Waste of time writing all that, then

Part 2 – Conclusions.

The length of delay due to drilling (10-15 days), rather than weather-related issues (5days) suggests that the drill string broke and was lost, so a side track was necessary – this would explain the mid-drill shipping of additional specialised equipment, and all the extra marine traffic activity.

Spud was supposed to be 4th October. We then know that there has been 15-20 days delay for a drill that was supposed to take 20 – 30 days, depending upon who you believe :-) . We can then add to that a short ST (5? days), or longer ST (8? days). This gives us until TD of main drill a minimum total of 35 days, or maximum of 50 days. The date range for TD is therefore between Tuesday 8th Nov to Wednesday 23rd November. Add on a 5 to 8 day ST. This then gives a date range for completion of all 3 prospects of between Sunday 13th November and Thursday 1st December.

Gil had better hope that he can get a couple of days shaved off the least favourable estimates, so that he can be all smiles at the presentation on Tuesday 29th November.

Part 1 - Background analysis.

I have done this brief analysis for my own info, perhaps others might also find it helpful, especially in the light of diverging, and often unreferenced, views that have been expressed here over the last few days.

AJ-1 well (1988).
This found oil in the Lower Cretaceous Lacustrine sequence. This sequence included pebbly, partially unconsolidated sands (reservoirs), interleaved with clays and siltstones. This sequence was about 340m thick, with a net pay of about 120m. The drilling encountered problems - the pebbly unconsolidated sand was difficult to drill, causing nutation of the bit, with resultant side wall erosion worsened by drilling mud wash out, and the clay sequences expanded into the bore under pressure from above. The drill string broke, they were unable to recover it, and had to sidetrack. A summary of this is found on pp. 88-91 of the 20th March 2022 Strand Hanson CPR.

Gazania-1 plan.
This drill was planned to penetrate the same stratigraphic target as AJ-1, but up-dip and therefore at a shallower level (-3000m for AJ-1, -2200m for GA-1. This is designated the Gazania prospect. GA-1 is also targeting a shallower target, Namaqualand, which is deltaic/lacustrine, but is assumed to have the same lithology as the AJ-1 Lacustrine sequence. For this reason, both Gazania & Namaqualand prospects are likely to present the same potential drilling problems as AJ-1. If successful, the intent was to sidetrack through a fault into the Pelargonium prospect. Pelargonium is exactly the same sequence as Gazania, but about 100m shallower, since Gazania is downthrown relative to Pelargonium.

There is some variance of opinion as to how long the initial (Namaqualand + Gazania) drill would take. The CPR states 20 days - p.85. Gil has stated 25 days in various interviews. p.14 of the 2018 Africa Energy presentation gives a very useful detailed drill plan (plus expected stratigraphic column) giving 30 days.

I have not seen a plan for the Pelargonium sidetrack, nor an estimate of how long it would take (anyone have a reliable reference?). If the original idea was to re-visit the Namaqualand sequence on the way down, they would have to ST at around -1800m (see diagram, CPR p.92), and go down through the Pelargonium fault block to around -2400m, giving perhaps a maximum of 700m. Since we now have a delay, they may be considering a less ambitious sidetrack, just targeting Pelargonium - this would only need to start at -2000m, so would be 200m, or two days, shorter. Two bores through Namaqualand might give some data on lateral pinch-out of reservoirs, but this may be of limited use since they are so close together, but most importantly would of course give another chance for the drill to stick/break.

We know from Keith Hill's comments that there was an initial weather delay (presumably from 4th to 9th Oct), followed by 10-15 days further delay while drilling. Running out of space, so conclusions

Sorry, should have pointed out that their gas contracts are priced in Dirhams, which is not very sensible, since they are then hostage to a strong dollar, hence the decline in apparent price when converted to $US.

SDX reported quarterly data today. Useful info:

*Morocco gas prices declined from $10.61 to $9.91 per MCF.
* They don't have enough gas to meet demand ..."2022 production guidance is lower than 2021 production as the Company evaluates its ability to deliver to new and existing consumers based on its current reserves base and pricing environment."
* Latest wells, with geology analogous to MOU-Fan, have high porosity, high permeability, but very thin reservoirs. (MOU-Fan reservoirs will be a lot thicker).. Despite these very small reservoirs, gas flow is enough for them to tie in the new wells - this is an indication of just how much more economically important MOU-Fan will be...."The SAK-1 well reached TD of 1,196m MD on 24 August 2022 and encountered a gas sand at the primary target interval at 1,107m MD finding 3.7m of net pay with an average porosity of 31%. A secondary gas sand was found at 1,079.6m MD, with a net pay thickness of 1.1m and an average porosity of 28%. The well was subsequently tied into the Company's infrastructure and production commended post period-end. The second well in the campaign, KSR-20, spud 12 September 2022 and reached TD of 1,410m MD post period-end on 1 October 2022, finding the primary target gas sands at 1,265m MD. The well is currently undergoing testing and will be brought on production in Q4 2022. "

I see that Sumbawanga has solar-powered street lighting.

@ ITV, O/T for everyone else. I didn't mention Ukraine, and I don't think Ukraine is a topic for humour. My daughters are half Ukrainian, their grandmother has been trapped in Crimea for almost 9 years, their uncle is also there under house arrest for his 'divergent' opinions, and his wife and two young children were in Kherson - we still don't know if they are OK.

https://seekingalpha.com/article/4558086-africa-oil-corp-aoiff-q3-2022-earnings-call-transcript

A few mistranslations from voice to text (including bizarre text mention of cannabis at one point!). Here's the most relevant detail during the Q & A:

On Gazania:
Q. "And I just wondering if you could give a little bit more color on why the Gazania well reserve has moved back slightly?"

A. Keith Hill: "Yes, I've got two reasons. So then, I guess I shouldn't go into too much detail. But, there was a weather delay at the beginning. And then the drilling has been taking longer than expected. So we're about 15 to 20 days behind prognosis on it. So far, operations are ongoing. There's no serious problems with the well, and it's taking longer than one night."
Don't see why that should drop the share price by 17%

On corporate activity, including a possible buy-out of ECO:

Keith Hill: "I do think it's unsustainable this portfolio approach that we have with our exploration companies. I think we set it up as a matter of convenience to get into some very good exploration plays." .... "We're not a portfolio company, we're an oil company. so I think the key well drilling right now is Gazania it is held by both ECO and Africa Energy, between the two of them, they've got 87.5%. So I think that one we need to see the results on that before we see what we want to do." .... "But I think my board has told me by the end of next year, we need to get that sorted out and get away from being a portfolio company and holding those blocks. So as I said, I think there's three options you either absorb them, which is something we would look at all three of those companies, buying out the interest, we don't have we divest them, selling them off to someone else, in the cases of projects that have been discovered and developed, like Brulpadda Luiperd, and potentially even Venus once we've drilled the appraisal wells, an outright sale of those prospect projects.
Or we even looked at spinning out some of these into an exploration vehicle."

I don't see any of that being negative for ECO.

@TTF & Push2. Good to see people with obvious industry experience on here. Thanks for your opinions, suggest others take note of what you have to say.

There was also some talk of a fractured basement reservoir - maybe they have gone down to 3000m?

Two possible positive reasons for things taking longer than planned.

We know that Namaqualand has the potential to be a stacked play. It is quite possible that there could be five or more reservoirs, and in the interests of obtaining maximum useful data for future work ECO may have decided to DST each of them.

Pelargonium is across the other side of a fault, but up dip, from Gazania. They may attempt to side track horizontally from a level some way above Gazania, then drill vertically down into Pelargonium in order to get the most accurate oil column data. This is not easy, but not impossible, and would certainly require all those Vulcan spacers we saw at Cape Town docks.

I will therefore go for a positive RNS on Thursday 24th.

"Putin invades Tanzania"?

Thanks, Golden. "...expected by end November 2022". This is likely to be made into a Netflix series.

Meanwhile, another two successful wells today for SDX in the Rharb Basin - of which Guercif is a continuation. SDX success rate is now over 90%, albeit with small 'puddles' of gas. btw, Lonny was responsible for drilling most of them, so yes, my guess at gcos is more than 27%

@WWP - except that the well test has not yet been done.

The short answer is that there is no CURRENT geological chance of success for MOU-2 (formerly MOU-4). The last formal evaluation was based on data available this time last year, and published in the January 2022 CPR. This was calculated by estimating the likelihood of several factors:
Source - 75%, Maturity - 75%, Reservoir - 80%, Seal - 80%, Structure - 75%, then multiplied together - this gives a 27% geological chance of success. (p.27)
The CPR clearly states: "It should be understood that any evaluation, particularly one involving exploration and future petroleum developments, may be subject to significant variations over short periods of time as new information becomes available." (p.7)
Indeed, relevant new data has become available. This includes re-worked seismic (including favourable AVO), independent evaluation of the MOU-1 logs, and the petrographical work confirming the extraordinarily favourable poroperm.

Here I must point out that I am not a Competent Person as defined under the 'AIM Rules for Companies and the Note for Mining and Oil & Gas Companies dated June 2009, as issued by London Stock Exchange plc', so the following is strictly my guesswork, and you should not take it into account for your investment purposes. This also applies for some folks on here who have quoted "an 85% cos."

Let's look at the parameters used to calculate gcos.

*Source & Maturity - re-examination of logs from both the GRF-1 well (drilled in 1972 by ELF) and the MOU-1 well drilled by PRD in 2021 clearly show abundant overpressured thermogenic gas, plus lower concentrations of biogenic gas (post-CPR info). This clearly must have come from somewhere, so Source and Maturity must be higher than 75%!

* Reservoir. This is a turbidite fan, and layers within this are invariably thicker and co****r the closer you get to the source of the turbidity current (the water/sand/mud slurry flowing down the graben wall and settling on the floor). MOU-2 is 8km nearer the source than MOU-1, which only penetrated the distal edge of the turbidite fan, so you would expect larger grain size and less consolidation within thicker reservoirs. The recently available (i.e., post-CPR) petrographic work showed the most favourable combination of porosity and permeability that I have ever seen. I think it reasonable that the Reservoir should be upgraded from 80%

* Seal & Structure. The MOU-fan has been subject to tectonic movement. This has resulted in a gentle anticline of reservoir sands overlain by an impermeable layer of gypsumiferous marls, which should provide a good trap. There has also been faulting, which could be good or bad - it provides a pathway up to the reservoir for migrating gas, but could also allow a leak from the reservoir. There is debate as to whether the gas chimney to the East of MOU-2 is a leak, or indicates fill-to spill.

So, taking account of the new data, drop in your own %ages for the above factors and multiply together - m

@Molokai - I actually said, using CPR & Strand Hanson independent estimates, that every ECO attributable 100MM Bbl was worth £1.52p per share.