"Galp Energia's second appraisal well on its huge Mopane discovery offshore Namibia has hit light oil and gas-condensate in its main objective. The news was released after close of play on the Lisbon Stock Exchange - where Galp's shares are traded - on Friday 29 November, but triggered an 18% increase in the share price of Toronto-listed Sintana Energy, which has a small indirect stake in Mopane.
Earlier this year, after drilling two wells, Galp claimed that Mopane holds hydrocarbon resources equivalent to 10 billion barrels of oil, and embarked on a farm-out process that was due to have concluded already, but which has been delayed. This latest well was designed to beef-up Galp's understanding of a discovery where three reservoirs - AVO-1, AVO-2 and AVO-3 - house hydrocarbons, although AVO-1 is understood to be the primary zone. Spudded by the Santorini drillship in Petroleum Exploration Licence 83 on 23 October, the Mopane-1A well hit light oil and gas-condensate in what the operator called "high quality reservoir-bearing sands" that "once again" indicated "good porosities, high permeabilities and high pressures." The Portuguese player also said the hydrocarbons have low oil viscosity characteristics, with minimum carbon dioxide and no hydrogen sulphide. Together with data from the Mopane-1X and Mopane-2X findings, Galp said "this appraisal well confirms the extension and quality of AVO-1."
Galp and its partners - state-owned Namcor and local player Custos each hold 10% interests - will now analyse and integrate all newly acquired data, while progressing future activities. These include more exploration and appraisal wells and a high-resolution proprietary 3D seismic campaign set to start this month. News from the Mopane-1A appraisal well saw the stock price of Sintana hit C$1.18 (US$0.84) at the close of trading on 29 November, valuing the junior company at about C$440 million."
PCL Price at posting:
1.9¢ Sentiment: Buy Disclosure: Held
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