RE: Upstream Online - Enog30 Nov 2024 11:54
Surety:
Published 29 November 2024, 16:11
London-listed independent Energean will not move forward with development of the Anchois discovery offshore Morocco following a “disappointing” drilling campaign, chief executive Mathios Rigas told Upstream on Friday.
Energean confirmed in September that initial data from the Anchois-3 well pointed to lower-than-expected volumes, while partner Chariot Energy revealed that gas pays in some of the sands were thinner than expected and other targets beneath those sands held only water.
“We found gas, but we didn't find enough for us to justify development,” Rigas told Upstream on Friday.
Rigas told Upstream previously that Anchois would have to house at least 500 billion cubic feet of gas to be developed but that field development would come down to negotiations on gas prices with the Moroccan government.
Energean entered the Moroccan market in December 2023, with a farm-in on the Anchois gas development, then billed as Morocco’s largest undeveloped discovery.
But while Rigas confirmed the partners are still finalising the technical assessment of the appraisal well, the project will “not move forward, at least not under our management.”
Energean does, however, remain optimistic about further gas opportunities in Morocco due to its “co-operative government," stability and some of the “best” tax regimes in the world for oil and gas development.
Mediterranean-focused Energean has sought to replicate the production success of its Israeli Kalish gas field in other geographies and the sale of its Italian, Croatian and Egyptian assets to Carlyle International Energy Partners is expected to free up capital and management time to do just that, Rigas said.
But an exit from the Anchois field “would be negative for Energean’s share price, especially without much growth upside outside of Israel,” Ashley Kelty, analyst and Panmure Liberium told Upstream on Friday.
However, Zeus Capital analyst Daniel Slater believes the below-expected drilling results at Anchois are balanced out by existing production that “continues to underpin the business, while also giving significant capability to invest in new projects, at Anchois or elsewhere.”
The company told investors on Thursday that its Israeli operation has not been impacted by ongoing tensions in the Middle East but even a 31% year-on-year increase in production over the first nine months of the year was not enough to stave off investor discontent and the company’s share price closed down by 10% on the previous day.
“While Energean is clearly having a great year and generating materially increased cash flows, the share price weakness was due to the reduction in production guidance for the full year. Unfortunately, markets remain in the mood to disproportionately punish negative news,” Slater told Upstream on Friday.
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