Dominion Petroleum (LON:DPL) shares shot up 17.5 percent today as investors await the results of a 1,236 square kilometre 3D seismic survey in deep-water Tanzania.
The seismic programme covered both the Alpha and Beta prospects, as well as three others on Block 7.
The data is being processing and ‘fast-track’ processed volume will be ready later this week, while full results will be complete by Q2 2011.
“We are extremely excited by what we already know about Block 7 and early results from the 3D support the drilling ... perhaps next year depending on rig availability," chief executive Andrew Cochran said.
Dominion shares have traded strongly throughout the session, with investors building on an initial 8 percent gain to make an intraday high at 4.09 pence, up 17.5 percent.
Shares were last changing hands around 4.05 pence.
Speaking with Proactive Investors, Daniel Stewart analyst Richard Nolan said the update was good news.
“Dominion is benefiting from two things ... the successful completion of the survey and growing momentum in East Africa,” Nolan said.
“We are seeing a lot more activity on this side of Africa.”
The analyst highlighted that major oil companies - BG Group (LON:BG) and Anadarko (NYSE:APC) - have made significant discoveries in the area and this has boosted some of the junior explorers like Dominion.
“The success in the region has been sparking investor interest.”
Indeed Dominion emphasised that BG’s discovery was ‘very significant’ as it proved the existence of a working hydrocarbon system in deep-water Tanzania.
Last month, BG Group (LON:BG) and Orphir Energy struck oil in the Pweza-1 well. It was the first discovery of its kind in Tanzania. Crucially it proved the existence of a working hydrocarbon system in deep-water Tanzania.
“[BG’s discovery] justifies the increased levels of interest shown by major industry players in deepwater East Africa,” Cochran added.
The seismic survey was carried out by Fugro Geoteam AS. The analysis of the seismic results will help to re-assess volumes and improve chances of success for the Alpha prospect, as well as the other prospects mapped in the survey area.
It will support amplitude variations with offset (AVO) studies. The company highlighted that such studies, based on 2D data, have already helped de-risk Alpha and Beta.
Dominion also highlighted a recently completed competent person’s report (CPR) that put the Alpha prospect’s mean prospective resource at 1.1 billion barrels of oil, or 7 trillion cubic feet in the gas case.
Meanwhile onshore Tanzania, the Kianika-1 well is being drilled on the Mandawa PSA and it is expected to reach the 2,900 metre planned depth before the end of November.
The company has a 10 percent interest in the Mandawa PSA.
Elsewhere Dominion is readying further seismic operations, in the Lake Edward basin which straddles Uganda and Democratic Republic of Congo.
It will start work on the first ever cross-border 2D seismic survey in the first quarter of 2011. Dominion plans to acquire over 300 kilometres of seismic data.
Dominion expects to hire contractors by year’s end, allowing the survey to start in January.
It is expected to last between 3 to 4 months.
"Obtaining the first ever cross-border seismic on the Lake Edward basin demonstrates Dominion's unique and strategic position in the play,” Cochran said.
The survey follows on from the Ngaji-1 well which was drilled in the Ugandan area of the project. The well did not identify any significant hydrocarbons, but it did provide more information about the prospective area.
Dominion said that Ngaji-1 well confirmed the presence of excellent quality reservoir sands as well as hints of source potential.
“While Ngaji-1 disappointed on some levels the subsequent analyses easily justify continued exploration of the basin, now armed with a better understanding of the basin as a whole,” Cochran added.
“We could return to drilling as early as next year depending on the outcome of the new seismic."