Anglo African Oil & Gas PLC (LON:AAOG) told investors that Schlumberger wireline logging of the recently drilled TLP-103C well has confirmed multiple discoveries at its Tilapia licence in the Republic of the Congo.
Logging has measured a total of 44 metres of oil column – with 26 metres in the Mengo reservoir (primary target), 13 metres in newly found horizons between the R3 and the Mengo, and, 5 metres in the R2 reservoir.
The company noted that tests have shown the R2 reservoir is not depleted, which confirms an onshore hydrocarbon system underlies the Tilapia area.
David Sefton, AAOG chief executive, described it as a “fantastic result” and said it exceeded company expectations.
“Subject to the results of flow testing, the well has the potential to provide AAOG with a major step-up in production and cash flow and marks an excellent start to the Tilapia field development programme,” Sefton said.
“Furthermore, with the geological model proven we look forward to the resumption of drilling at TLP-103C targeting the deeper Djeno horizon, which based on the production rates achieved from this reservoir on neighbouring fields, has the potential to be truly transformational for AAOG.”
Sefton also highlighted recent findings related to the TLP-101 well which is now seen as having production upside, through the use of the TLP-102 well as a water-injector in an enhanced oil recovery scheme.
The company recently said the TLP-101 well could yield up to 400 barrels of oil per day.
Sefton said: “These are exciting times for the company and the board believes AAOG is on track to become the highly-cash generative oil and gas company we set out to build.”
AAOG has now commissioned an update to the company’s reserves estimates in light of its recent successes.
Brokers upbeat as drilling continues
Broker finnCap described the result as “very encouraging” and said that the oil columns had “exceeded expectations”.
“Further work is needed to demonstrate commerciality of the Mengo. However, this well will be completed as a producer from at least one zone, boosting production and cash flow,” finnCap said in a note.
“The well is now being deepened to the higher-risk Djeno target, with management encouraged by the accuracy of its geological model so far.”
Elsewhere, analysts at SP Angel highlighted that the result will “assist the company in assessing the commerciality of the TLP103C well.
“This adds to what should also be an upgrade to reserves, given the step out and appraisal nature of the drilling at the R1 – 3 and Mengo levels. What would now be the icing on the cake will be a discovery at the Djeno levels, which is deemed to be exploration at this location.
“While the testing will provide the information on the commercial extent of the successful appraisal levels and the discoveries, this is a positive step forward for the company.”
--Updated to include broker commentary--