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Morocco still waiting for offshore oil success

Tangiers Petroleum's TAO well result is the latest in a series of disappointments for investors in Morocco’s would-be offshore oil boom
Morocco still waiting for offshore oil success

Small cap investors in Morocco’s would-be offshore oil boom are still awaiting exploration success as Tangiers Petroleum’s (LON:TPET, ASX:TPT) GALP operated well drew a blank.

Having revealed initial disappointment early last week, with no hydrocarbons in a secondary target, the company has now confirmed that Trident (the well’s primary target) wasn’t successful either.

The well was drilled to a total depth of 3,518m MD and did not encounter favourable reservoir quality in the Trident prospect, Tangiers said.

TAO-1 well will now be plugged and abandoned and the data used to assess the prospectivity of the Tarfaya Offshore Blocks I - VIII.

Dave Wall, Tangiers’ managing director, said: "The company is disappointed that success was not achieved at TAO-1 and we wish to thank our shareholders for their support over the recent challenging period.

“Tangiers board and management remains firmly focused on creating value for shareholders and look forward to providing updates on New Ventures initiatives in the not too distant future."

Tangiers had a 25% stake in TAO-1, where Galp Energia with a 50% stake was the operator. The remaining 25% is held by ONHYM (Morocco's National Office of Hydrocarbons and Mines).

It marks the fourth unsuccessful drill programme in Moroccan waters in the ongoing, sector-wide campaign, though, as an exploration frontier of fairly expansive size it may yet be early days for the North African country.

Nevertheless, as Tangier’s near 70% decline on Monday reflects, investor sentiment is at a particularly low ebb – and many in the sector will now be hoping for much better as they look to Genel Energy’s (LON:GENL) drilling of the SM-1 well.

Drilling work began last week on the well which also involves San Leon Energy (LON:SLE), Serica (LON:SQZ) and Petromaroc (CVE:PMA) with stakes of 8.5%, 5%  and 1.5% respectively.

Here, drilling is located in the Sidi Moussa block and it is targeting a 300mln barrel oil target. The programme is expected to take between two to three months.

Kosmos Energy, which sunk one of the previously unsuccessful wells, is drilling again later this year and, in early 2015, Pura Vida Energy (ASX:PVD) and Freeport will begin a two-well programme.

Meanwhile, for investors still holding Tangiers shares after today’s sell off the obvious question would be what is next for the company?

In terms of the Tarfaya block and offshore Morocco time will be needed to pick over the results and for the operator to carry out an analysis of what it means for the wider acreage (8 permits spanning 11,281 square kilometres, or an area equivalent to 50 North Sea blocks).

More broadly it is understood that Africa remains an area of interest for the company, which amid management changes, withdrew from a takeover of ASX-listed Jacka earlier this year.

Naturally investors can expect to learn more of the company’s plans in the coming weeks once the dust has settled on the TAO result.

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