1 May 2012 07:15
30 April 2012 Red Emperor Resources NL ("Red Emperor" or "the Company") Quarterly Report for Period Ending 31 March 2012 Issued Capital 237M* ASX Code RMP Closing price A$0.64* AIM Code RMP Closing Price £0.43** as at 30 March 2012
The Board of Red Emperor Resources NL (Company) is pleased to provide the following commentary to be read in conjunction with the Appendix 5B (Quarterly Cash Flow Report) which is attached.
March 2012 Quarter - Highlights
• Drilling commenced at Puntland Project
• Placement completed raising approximately £8.18 million (A$13 million)
Puntland Projects
During the quarter the Joint Venture between Red Emperor, Range Resources Limited and Horn Petroleum Corp successfully spudded the historic Shabeel-1 well on the Dharoor Block in Puntland, Somalia which is being drilled to a target depth of 3,800 meters and is the first of two highly prospective exploration wells to be drilled in the Dharoor Valley by the Joint Venture.
Preparations also commenced on the site construction on the second exploration well site - Shabeel North - with the setting of surface casing and drilling of a 50m pilot hole, with construction continuing during the quarter that has seen the Shabeel North site nearing completion post quarter end in readiness to receive the drilling rig following the successful completion of the Shabeel well. Red Emperor maintains its option over participating in the second well as per its farmin agreement.
Shabeel-1 Well
The last reported depth of the well was 2,953m with casing having been set to circa 2,700m. The well drilled through primarily tight limestones and shales of Lower Tertiary to Upper Cretaceous age and encountered a 355 metre section of Upper Cretaceous sands and shales of the Tisje / Jesomma Formations at a depth of approximately 1,660 metres. The sands in this interval exhibited both oil and gas shows and petrophysical analysis of downhole electrical logs indicates a potential pay zone of between 12 and 20 metres in the section. Attempts to sample formation fluids using a wireline formation tester were not successful and thus the zone will require cased hole testing to confirm whether they are oil bearing.
The Shabeel-1 and Shabeel North prospects are located on a Jurassic aged rift system which is part of the same system that has proven to be highly productive in the Masila and Shabwa Basins in Yemen that contain an estimated 6 billion barrels of oil. Both prospects are very large fault block prospects with internal estimates of Prospective Resources of over 300 million barrels of oil (mean 100% basis), with Red Emperor's 20% attributable interest being over 60 million barrels. Source rocks are expected to be rich Jurassic Kimmeridgian shales in the deep portion of the rift immediately down dip from the Shabeel prospects. Reservoirs are expected to be sandstones and carbonates of the Lower Cretaceous and Jurassic systems analogous to Yemen.
Puntland Offshore
During the quarter, Range Resources entered into an agreement with the Puntland Government with respect to obtaining a 100% working interest in the highly prospective Nugaal Basin Offshore Block. The Block is an extension of the onshore Nugaal Region that has the potential for deltaic deposits from the Nugaal Valley drainage system and comprises over 10,000km. It is Range's intention to offer a participation interest to Red Emperor on terms to be agreed.
Red Emperor will update the market at such time terms have been received and reviewed by the Company.
Georgia Project
During the quarter, site construction commenced in readiness for the second exploration well in Georgia - Namakhvani Well (TD circa 3,500m) - which is the Kursebi 6 Prospect. Progress on the site construction has been severely hampered during the quarter due to the severe weather conditions that have been experienced across Europe and Eastern Europe. As a result, the Joint Venture has delayed the mobilisation of the drilling rig and ancillary equipment to the Namakhvani Well to allow for more robust site construction. Red Emperor will look to provide further update as to the progress shortly.
Given the unexpected geological sequences encountered with the first Well (Mukhiani-1), the Joint Venture engaged new independent technical consultants, NTD Energy, to perform a fresh review of all of the seismic and geological data across the top 3 Kursebi prospects previously identified. The Kursebi-6 prospect was identified as the most robust prospect with a more clearly defined structure and indications of a significantly thicker Jurassic section, increasing chances of encountering more reservoir and mature source rocks.
Below are the estimates of undiscovered Stock Tank Oil Initially In Place (STOIIP) for the prospect.
STOIIP (Mmbbls) P90 P50 P10 Mean K-6 Prospect - 100% 32.2 84.8 185.8 99.2 Attributable to RMP - 6.44 16.96 37.16 19.84 20%
Also during the quarter, preparations had begun on the 2D seismic program on Block VIb with the engagement of the Geological Institute of Israel ("GII"), who performed the initial 410km 2D seismic program in 2009. A 265 km 2D seismic program will be undertaken on Block VIb that will endeavour to provide northern closure on the initial structures previously identified, as well as looking at identifying possible unconventional targets. The program will include a seismic cross section over the recently drilled Mukhiani-1 Well to assist with the potential sidetrack option as identified through earlier Vertical Seismic Profiling (VSP).
NTD Energy will be undertaking an active role in supervising the seismic program all the way from acquisition to processing and interpretation. They will also perform a strategic review across the two licenses; including identifying, promoting and developing the unconventional (CBM / shale) plays that are believed to exist across the two licence areas through the introduction of farm-in partners.
Corporate
During the quarter the Company completed a placement raising approximately £ 8.18 million (A$13 million) by issue of securities to sophisticated investors in Australia and the UK. The funds raised will be used for working capital and to progress the Company's exploration activities in Puntland and Georgia.
For further information please visit www.redemperorresources.com or contact:
Red Emperor
Greg Bandy +61 8 9225 2826Rebecca Sandford +44 20 7025 7040Cairn Financial Advisers LLP (Nominated Adviser)Jo Turner / Tony Rawlinson +44 20 7148 7900Fox-Davies Capital Limited (Joint Broker)Daniel Fox-Davies / Richard Hail +44 20 3463 5000Old Park Lane Capital plc (Joint Broker)Luca Tenuta / Michael Parnes +44 20 7493 8188Tavistock CommunicationsPaul Youens / Ed Portman +44 20 7920 3150
Background
Red Emperor Resources NL is a natural resources exploration company with interests in the frontier state of Puntland, Somalia and the Republic of Georgia.
* In Puntland, Red Emperor holds a 20% working interest in two licences encompassing the highly prospective Dharoor and Nugaal valleys. These two exploration areas cover over 36,000km2. The operator and 60% interest holder, Horn Petroleum Corp. is currently drilling the first well in a two well programme targeting 300mmbls of best estimate Prospective Resources (100% basis). Site construction has commenced on the second well (targeting 375mmbls) with the setting of the 30 inch surface casing and drilling of a 50 meter pilot hole in readiness for spudding following completion of the first well. * In the Republic of Georgia, Red Emperor has a 20% working interest in onshore blocks VIa and VIb, covering approx. 6,500km2. Joint Venture partner Range Resources Limited previously funded a 410km 2D seismic program with independent consultants RPS Energy identifying 68 potential structures containing an estimated 2.045 billion barrels of undiscovered oil-in-place (on a mean 100% basis) with the first (Mukhiani-1) of two exploration wells having spudded in July 2011. Re-interpreted seismic supported by the Mukhiani-1 vertical seismic profiling has identified new fault and stratigraphic trapping potential with the possibility of a side track well to be drilled post additional seismic in 2H 2012.
XLON