--ADDS SHARE PRICE & BROKER COMMENT--
Shares in Tanzanian joint venture partners Aminex (LON:AEX) and Solo Oil (LON:SOLO) advanced following another upgrade to the potential size of the Ntorya area.
Aminex shares rose 21.6% trading at 1.46p and Solo Oil was up 11.5% to 0.78p.
Last week the project’s resource potential was lifted from 1.2 trillion cubic feet (tcf) to 1.9tcf, based on partially completed seismic analysis, and today, this was increased further to 2.3tcf with the inclusion of an additional appraisal target.
Aminex told investors that the new seismic interpretation indicates some commonality between the Ntorya field and the system observed in the previously drilled Likonde well to the North.
It said the data indicates an additional appraisal target that would intersect both the Ntorya gas and condensate sands and an extension of the Lower Tertiary sands that were found to have oil and gas shows in the Likonde-1 well.
"The results of the newly acquired 2014 seismic programme continue to confirm the significant hydrocarbon potential of the Ruvuma PSA,” said Aminex chief executive Jay Bhattacherjee.
“Based on the detailed and ongoing evaluation of the new seismic and well data, we believe there is potential for a liquids play.
“This would add further value to the discovered gas that would have access to market via the Dar es Salaam-Mnazi Bay pipeline, which is on schedule to be completed by the year end and runs through our Ruvuma PSA.”
Solo Oil executive director Neil Ritson, meanwhile, said: "Ongoing work by the operator is revealing significant additional upside in the Ruvuma PSC and the new seismic data has been able to shed light on the significance of the shows that were seen at Likonde-1 and how those relate to the discovery made at Ntorya-1.
“This all supports our belief that the Ruvuma will rapidly evolve as a gas, and perhaps oil, development area in the next few years, supported by the access to a ready market in Dar es Salaam to which the area is now connected by a pipeline."
Likonde 1 penetrated 97 metres of net sand with an average porosity of 17% within a 316 metre gross Lower Tertiary sand sequence and hydrocarbon shows were encountered in deeper Jurassic zones, Aminex highlighted.
The well was terminated prematurely at depth of 3,647 metres due to an unexpected influx of high pressure gas and as such it did not reach the deepest target.
Ntorya 1 did not encounter the Likonde Tertiary sand channel but instead discovered a deeper Cretaceous gas discovery, which flow tested at a rate of 20mln cubic feet of gas and 139 barrels of associated condensate per day.
Andrew McGeary, analyst at Northland Capital, described the upgrade as “good news”, though he points out that regardless of this enhancement the project is already earmarked for development and that for investors the focus should be on that aspect of the project.
In that regard McGeary highlights that the project is on-track for first gas in 2015, and that the programme is financed to this key milestone.
“The main issues have been the lack of infrastructure, timing and uncertain commerciality of gas sales with the Tanzanian authorities,” the analyst said.
“The Dar Es Salaam-Mnazi Bay pipeline is thought to be on schedule for completion by the end of the year and a gas sales agreement is now in place making this interesting.”
Elsewhere, Old Park Lane Capital analyst Barney Gray said: “This is the second gas in place upgrade for Ntorya within a week as the new seismic data is fully interpreted.
“The work is revealing significant upside to the Ruvuma PSC and the importance of the data from the Likonde-1 well in particular.
“With new information at hand, Solo believes that Ruvuma has the critical mass to evolve as a major gas and possibly oil development area over the next few years. This strategy will be accelerated by access to the nearby Mtwara to Dar es Salaam market which is being commissioned later this year.”