Galp Energia confirmed it has a multibillion barrel oilfield on its hands in Namibia’s prolific Orange basin after completing a successful well test on its major Mopane oil and gas discovery in Petroleum Exploration Licence 83.The Lisbon-based player’s stock price shot up by more than 17% on Monday morning to hit an all-time high of €18.77 ($19.99), a price surge that sent its market capitalisation spiraling towards €11.5 billion.The only time Galp’s stock price came close these rarefied heights was on 31 December 2007, when it hit €18.77 and on 31 July 2018, when it surged to €17.39.Ever since Mopane was discovered in January, Galp's partners have said it has the potential to hold hydrocarbon-in-place resources of 10 billion barrels of oil equivalent.RelatedGalp spuds appraisal well on potential giant discovery in Namibia In contrast, the Portuguese operator only released short and terse operational updates on its drilling activities, with no indications of resource numbers.However, that all changed this morning when Galp confirmed that Mopane has the potential to host 10 billion boe of resources in place.Given a conservative recovery rate of 30%, then Galp could be sitting on at least 3 billion barrels of recoverable oil and gas.The operator reported that, based on logging results, the discovered reservoirs have “good porosities, high pressures and high permeabilities in large hydrocarbon columns” — all indicators of an impressive field.Adding to the optimism, Galp reported that Mopane’s oil quality is good because fluid samples indicate “very low oil viscosity” with minimal carbon dioxide and hydrogen sulphide concentrations.Furthermore, during a drill stem test, oil flows were impressive, despite being constrained by equipment and reached the maximum allowed limit of about 14,000 barrels oil equivalent per day.These positive results, said Galp, “potentially” position Mopane as “an important commercial discovery,” stressing that “in the Mopane complex alone, and before drilling additional exploration and appraisal wells, hydrocarbon in-place estimates are 10 billion barrels of oil equivalent, or higher”.State oil company Namcor, a Mopane partner, said: "The reservoirs' log measures showcase favourable porosities, high pressures and high permeabilities in extensive hydrocarbon columns," with the fluid samples revealing "very low" oil viscosity, minimal concentrations of CO2 and "no" H2S, "underscoring the quality of the resource."All acquired data from the drilling campaign will be analysed and integrated into an updated reservoir model that will serve as the basis to refine Galp´s near-term drilling plan to further explore, appraise and develop the wider Mopane complex.Jefferies analyst Giacomo Romeo said the “very positive” test results are “close to” the “best-case scenario” for this time in an exploration de-risking process.Using Galp's in-place estimates, a 30% recovery factor and a $5 per boe net present value used by Wood Mackenzie to value Namibian discoveries, he said "we can derive an unrisked valuation for Mopane of €14 per share, net to Galp.Romeo added: ”We believe that some natural gas should be expected given the light oil (and) low viscosity nature of the discovery, but we understand that the reservoir pressure should support reinjection.”The semi-submersible drilling rig Hercules that Galp chartered for its PEL 83 programme has now been released.Knowledge Katti, chief executive of Namibia-based Custos Energy, a Mopane partner, said: “The successful culmination of the exploration campaign at Mopane, including a well test reaching the maximum allowable limit, further demonstrates the scope and potential of PEL 83, with Mopane alone containing potential in excess of 10 billion barrels of original oil in place, making it one of the largest discoveries globally.”Robert Bose, chief executive of Sintana — a Toronto-listed player that holds an indirect stake in PEL 83 via Custos — said: “The results of the initial exploration campaign on PEL 83 are a true milestone for all stakeholders. We are thrilled to be a part of this world class discovery."Mopane-1X discovered oil in two reservoir sands in January this year, with a successful appraisal well completed in March that found oil in three reservoirs, one of which was the same play intercepted in the discovery probe.PEL 83 is located immediately north of PEL 39 home to Shell’s basin opening discoveries at Graff-1, La Rona-1, Jonker-1 and Enigma-1.In addition, it is located north and east of PEL 56 where TotalEnergies announced its giant oil discovery at Venus-1 and another major oil find at Mangetti-1X.Galp has an 80% stake in PEL 93 — which encompasses blocks 2813A and 2814B — with Custos and state-owned Namcor each holding 10% interests. Sintana has an indirect 49% interest in Custos.
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