Malcys Blog

An article from Malcys Blog after SNE1 Discovery. Malcys Blog is widely read in UK and concentrates on oil news. Dated 10th Nov. You can also go to this link. If you search senegal on the sight you will get past articles on curreent drilling and thoughts on what FAR will do.

http://www.malcysblog.com/?s=senegal&submit=Go
Cairn Energy- Senegal, the next Ghana?

So my guess about SNE-1 on Friday turned out to be uncannily accurate as the well result was announced by operator Cairn this morning. This is ‘a discovery of high quality crude oil’ according to the company and remember that the deeper target has not yet been reached. This means that over the next two to three weeks the size of the discovery might increase significantly. Already the P90 number is 150m bbls, P50 of 330m and P10 of 670m and I hear that the source rocks are very high quality and the geotechnical term is ‘world class’. A 95m oil bearing column with a gas cap leaving net oil pay of 36m (my guess on Friday was 35m+!) of 32º API crude is indeed very positive. Having already labelled the discovery commercial, Cairn are clearly delighted to have opened up a new basin on the Atlantic Margin.
I have had a chance to speak to the Cairn guys this morning and it is clear that they are very positive but that there might indeed be plenty of upside. For example, FAN-1 did drill into the top neck of the fan but there is no clue as to how far the fan might extend, if it is a long way then who knows how big the discovery might be? After all, it intersected a gross 500m oil-bearing section which indicates a prolific oil generating province.
There are plenty of people in the oil industry who like these Atlantic Margin plays and this discovery will have pleased them a lot. For Cairn, it validates their decision to get into pieces of acreage in different plays in different settings, much of which is under-explored. I have heard that Conoco are very excited about this and have had a huge team of top people on the case, this leads me to believe that this discovery is likely to be significantly bigger than has been described this morning and by this I dont just mean in the deeper target. What happens next is most interesting on many fronts, Conoco will surely want more of this than their 35% and Cairn should be careful about under-playing the size of the discovery, whilst for Far this is the find that dreams are made of, I suspect that celebrations went on late into the night in Melbourne.
Cairn were up on Friday as the early birds gathered the worms and today the stock is up another 11% which is good but not good enough. Cairn have 40% of what I think is a huge, world class discovery and adding £100m on to their market cap doesn’t do it justice, however, in these markets and with the company’s Indian distractions I can understand what is going on. When the deeper target is completed whatever the result, and the data is processed I think that holders of both Far and Cairn will realise just how big this discovery might be, you never know, Senegal may well be the next Ghana…
- See more at: http://www.malcysblog.com/2014/11/o...undry-afren-and-finally/#sthash.doaKu8rC.dpuf