DANA PETROLEUM: DRILLING FOR 1 BILLION BARRELS OF OIL

oilbarrel.com

03.01.2006
Drillbit Disappointments In Mauritania, Angola And The North Sea But Good News For Burren In Congo
High oil prices have triggered increased levels of exploration spending across the sector. Rig owners are enjoying soaring day rates and busy order books while oil companies are making friends with rivals that have access to spare rig slots. Yet all this spending and spudding doesn’t necessarily equate to more discoveries: the black stuff is getting harder and harder to find.

Mauritania may be an explorer’s favourite - there have been a string of exciting oil and gas finds in these previously undrilled waters - but it has also seen its disappointments. The most recent of these is the Faucon-1 wildcat in Dana Petroleum’s Block 1, which lies outside the “hot zone” of blocks 3,4 and 5 (home to the likes of Woodside’s Chinguetti oilfield, now on track for first oil in the first months of 2006).

At first hopes were high for Faucon-1. There were pre-drill estimates of a possible one billion barrel prospect and shares in Dana jumped 82 pence to 973 pence in early December (even in the face of Gordon Brown’s North Sea tax hike) on news that the well had encountered a fluid influx of 27 barrels and penetrated hydrocarbon-bearing sands in the upper Cretaceous - but at that time the well had not been logged or tested.

Further details released later in the month were less encouraging and shares in Dana Petroleum dropped by more than 10 per cent, making the Aberdeen-headquartered company’s earlier decision to reduce its 60 per cent exposure by farming out 24 per cent to French company Gaz de France seem eminently sensible.

The well is now being plugged and abandoned, after finding two hydrocarbon-bearing sandstones some 150 metres apart, of which the upper zone was gas-bearing and the lower sandstone appeared to contain light oil or liquids-rich gas-condensate. Further details will be released in January once the fluid samples recovered downhole have been analysed in an onshore lab, said Dana in a statement.

It was left to partner company ROC Oil (2 per cent) to give a little more detail on the well: “a regionally significant but sub-commercial, discovery”. The City backed this analysis and a number of analysts downgraded Dana in the wake of the Faucon-1 results.
Even so, the well has proved the existence of a working hydrocarbon system outside the Mauritania “hotzone”: Faucon-1 was drilled 140 km south of Chinguetti. As ROC Oil’s CEO John Doran noted, “Exploration offshore Mauritania is still in its infancy: more than 14 million acres/50,000 sq km; barely scratched by the drill bit."

It wasn’t just exploration offshore Mauritania that proved disappointing in the days running up to Christmas. Tullow Oil, which recently signed up for its first exploration project in Angola, announced that two wells there, Ngueve-1 and Henda-1, had come in dry. The company has a 15 per cent stake in the Devon Energy-operated 4,800 sq km Block 10 in the South Kwanza Basin and believes there is further prospectivity on the acreage.

Closer to home, Elixir Petroleum’s Muness well in the UK North Sea is being plugged and abandoned after finding only minor gas shows. Elixir has a 7 per cent stake in the block and is already looking ahead to its next North Sea project: the high impact Jaguar well, which is due to spud later in January.

It wasn’t all doom and gloom at the drillbit in December, however. Burren Energy’s M’Boundi field in Congo (Brazzaville) yet again delighted the market as new development drilling produced some exciting production rates. Well MBD 1201 on the northwest perimeter of the field is flowing at 3,200 bpd, MBD 1104 to the west at 700 bpd and MBD 1006 on the northeast perimeter at 2,600 bpd. Development wells MBD 1202, 1105 and 1903 are currently drilling and, if successful, are expected to be placed on production later this month.
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