Wessex Exploration's new assets are the missing pieces of jigsaw, says chairman

The excitement over Wessex Exploration’s (LON:WSX) stake in the potentially world class oil discovery off the coast of Guyane has tended to overshadow its other assets.

Today the spotlight turned from the Atlantic waters off the coast of South America, to somewhere less exotic and far closer to home.

This morning the group revealed that it and partner Norwest Energy have been provisionally awarded five exploration blocks in the English Channel in the 26th licensing round held by Department of Energy and Climate Change.

Now the Channel isn’t noted for being prolific in hydrocarbons. However the blocks lie to the east and south-east of Wytch Farm in Dorset, Britain’s largest onshore oil field. 

They also butt right up to the company’s two existing onshore licences, which means that Wessex and its partner own most of the acreage around Wytch Farm. 

“We have done a lot of work onshore,” said David Bramhill, Wessex’s chairman. 

“The licences we have been offered are extensions of the onshore licences. The structures we have already mapped extend offshore. So we have the missing pieces of the jigsaw.”

It was only when BP sold its controlling interest in Wytch Farm for over US$600 million last year that the potential value of the areas around it became apparent to rank and file investors.

However the experts, including Wessex’s managing director Frederik Dekker, who has explored the oil producing Weald and Wessex basins, have long known this geologically complex region could harbour buried treasure. 

Wytch Farm was discovered by the nationalised British Gas in 1973 and began producing oil six years later.

To date it has yielded almost 400 million barrels of crude and at its peak in 1997 it was producing over 100,000 barrels a day.

It is located in a faulted block of Jurassic and older rocks beneath the Hampshire Basin, close to the steeply sloping fold in the overlying chalk called a monocline. 

The Purbeck Monocline defines the field’s southern limit.  It consists of three separate reservoirs known as Bridport, Sherwood and Frome. 

Bridport, the first discovery, is in the Jurassic Bridport Sands 900 metres below Poole Harbour. 

The much larger Sherwood reservoir - discovered in 1978 - is below this in the Triassic Sherwood Sands at 1,600 metres and extends under Poole Bay. 

Frome, meanwhile, extends eastwards from the exclusive Sandbanks area of Poole and Studland across the harbour for around 10 six miles under the sea to the south of Bournemouth.

The Wessex blocks are believed to contain at least six different structural leads with a geological chance of success ranging from 15 per cent to 32 per cent.

The company, which has already carried out work on its existing licences, is thought to be keen to embark on a comprehensive seismic survey of the area to identify the most promising drill targets.  

The company, which raised £12 million last month, has set aside £1 million to fund its programme in Wessex Basin up to the drilling stage, which could be as early as next year.

Of course Wessex’s growing interests in the UK are just part of the story. The group also owns 70 per cent of the Juan de Nova project in the Mozambique Channel, and a 1.25 per cent stake in the potentially world class discovery off the coast of  Guyane.

The company’s share price more than doubled when operator Tullow Oil (LON:TLW) revealed  the Zaedyus well had encountered significant accumulations of oil last year.

The work also established that Zaedyus was the mirror image of the Jubilee Field off the coast of Ghana and suggests it has uncovered a new oil frontier. 

Today’s news gave the shares a modest boost (the stock was up 2 per cent by 1pm), though it has also served another purpose, according to Bramhill.

“This reminds everyone that Wessex is not just about Guyane, where the news has been excellent ,” he said. 

“We have the Mozambique Channel and the asset we originally started off with: the Wessex Basin.”