G'day Preempt...

G'day Preempt

http://www.intersuisse.com.au/files/Morning%20Note%20Thursday.pdf

Interesting points are "Details of the drilling
program are to be finalised by early October and drilling of the first hole is scheduled for
January 2008."


Overview
RRS has acquired 100% of the exclusive rights to explore and develop all oil, gas and
other minerals in the State of Puntland in north eastern Somalia. The acquisition took place
in two stages, the first in October 2005 which gave the company a 50.1% interest and the
second in May 2007 following a US$20 million capital raising.
Puntland covers an area of approximately 212,000 sq km and is perceived as the
geological mirror image of Yemen across the Gulf of Aden and the southern fringe of the
Arabian oil province. Several companies that had operated in Yemen (Agip, Shell, Conoco,
Phillips) recognised identical geological structures in Puntland and subsequently acquired
acreage in the second half of the 1980’s. The most important research was carried out by
Conoco who used modern seismic methods to identify the Dharoor and Nogal basins. Both
basins are grabens covering an area of 250 km by 50 km in a WNW-ESE orientation,
essentially parallel to the major Yemen basins.
By analogy with the similar Yemen rift basins, geologists expect Puntland to host
recoverable oil reserves of the order of 5 billion barrels. In addition, the Ogaden province of
Ethiopia, abutting the western border of Puntland, has long been known as an important
gas province. The Culab gas field, discovered in 1974 by Tenneco, has proven reserves of
3.7 Tcf.
Conoco drilled two wells in the Nogal basin with oil shows recorded in both before civil
unrest in 1991 led to its withdrawal from the country. Conoco is reported to have spent
approximately US$150 million on its exploration campaign which comprised 4,000 km of
2D seismic and the two wells. The drilling of Nogal 1 allowed Conoco to interpret the 28/B
prospect and it concluded most likely recoverable reserves of 516 million barrels. The
reserves were split between two different horizons, Jurassic and Cretaceous, over an area
of 18.5 sq km and pay depth of 200 feet each. The figures are considered to be
conservative given that pay depths in major reservoirs in Yemen are up to 1,500 feet. Also
a recover factor of 30% was applied compared to actual recoveries of up to 70% in Yemen.
Africa Oil Corp is farming in to the onshore hydrocarbon potential and will fund the first $45
million of a four hole drilling program to earn an 80% interest. Details of the drilling
program are to be finalised by early October and drilling of the first hole is scheduled for
January 2008.
The mineral potential of Puntland is less well known than that of hydrocarbons. Limited
exploration work that was carried out in the 1970’s showed occurrences of lead-zinc,
copper, iron, manganese, tin and uranium. Historic silver rich lead-zinc mines in Jurassic
limestones at Qandala, located 80 km east of Bosasso are geologically analogous to the
Jabali deposit in Yemen. Jabali was reputedly one of the ancient world’s richest sources of
silver. In addition, heavy mineral sands occur in several in several coastal locations on the
Gulf of Aden and the Indian Ocean shores.
The self proclaimed Puntland State of Somalia has considered itself since 1998 as an
autonomous region but does not seek formal independence from Mogadishu, with which it
enjoys broadly peaceful relations. It is excepted as such and consequently neither needs
nor seeks international recognition as an independent state. The Transitional Federal
Government of Somalia acknowledges in principle Puntland’s freedom to exploit its own oil
and mineral resources and has signed an agreement to this effect. Following elections in
2005 Puntland can essentially be considered a democratic country.