Africa-Press – Gambia. Up until very recently, amidst the rise of ESG, you could’ve been forgiven for thinking that the high-impact oil exploration dog had long since had its day.
But, in fact some small-cap drillers are enjoying a renaissance (others got their opportunity and had hopes dashed).
Evidently, opportunistically timed high risk, high reward (hit or bust) exploration is back and has sent a clutch of junior oil and gas stocks sharply higher in recent months.
The likes of Pantheon Resources PLC (AIM:PANR, OTC:PTHRF) and Chariot Ltd (AIM:CHAR, OTC:OIGLF) have been transformed by recent successes with the drill bit, whilst other explorers have been sent back to the drawing board after seeing their wells come up dry.
More wells are slated for the coming months.Pantheon beating expectations in Alaska
Pantheon shares are up some 85% in the past six months, now valuing the company at £1.1bn, after better than expected well successes on Alaska’s North Slope.
Vertical test wells yielded flow rates above pre-drill forecasts which, when extrapolated up to the corresponding rates likely to come from a horizontal bore, point to large and lucrative new discoveries.
The AIM-quoted company is now looking ahead to the next programme of drilling, which will focus on horizontal wells and long-term production testing.
Production testing will provide some initial cash flow though more significantly promises to open-up a high potential development that is particularly attractive presently given that it represents domestic US reserves.
88 Energy now looking more to production
The latest focus for 88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) appears to be recently acquired producing assets in Texas, as it endured disappointment with its high-impact well in Alaska, in the same region a Pantheon enjoyed success.
Despite promising oil shows and mud gas readings during drilling the Merlin-2 well found the reservoir quality insufficient to warrant production testing.
88 Energy shares are down close to 50% from pre-drill levels, though attentions are turning towards cash flows in Texas.
Chariot’s breakout success
Chariot, an explorer that always promised a lot of potential, shot up more than 260% in the first quarter of 2022 driven by its standout success with the Anchois gas project offshore Morocco.
The Anchois-2 well encountered significant gas accumulations (over 50 metres of pay) within its appraisal target but, also, hit three further success in separate exploration targets which altogether over 250 metres of pay, blowing away expectations.
It opened up what may become an accelerated development, to deliver revenue from production and sales into a market thirsty for gas – at the same time Chariot, now a company focussed on transitional energy opportunities more than high risk exploration, is also pursuing renewable energy ventures in Africa as well.
Advance Energy’s “unexpected” disappointment
Former Chariot chief executive Larry Bottomley is now at the helm at Advance Energy PLC (AIM:ADV), joining after the huge disappointment of the Buffalo well which resulted in a manage clear-out at Advance.
Advance Energy’s part-owned Buffalo-10 well found only residual oil in what had been thought of as a low-risk programme. At the project, prior independent assessment was seen that a commercial outcome is “highly likely”. The disappointment was quickly manifest in the company’s share price, which has lost 95% in the year to date.
Under Bottomley, the company is now assessing other opportunities in its pipeline.
Empyrean hopes to make it big in China
A well offshore China, for Empyrean Energy PLC (AIM:EME), could be seen as one of the year’s ‘biggest’ wells.
AIM-quoted Empyrean kicked off drilling this month offshore China where it is targeting some 225 MMbbl (million barrels) and a P10 in place upside of 395 MMbbl.
Jade is the first of the three identified prospects within Block 29/11, which also contains the Topaz and Pearl prospects with a combined in-place potential of 884 MMbbl. Any oil discovered is expected to be light and in the 38-41 API range, similar to nearby discoveries.
The expected Total Depth (TD) of the well is 2,860 metres with Logging While Drilling (LWD) operations to be carried out simultaneously. If hydrocarbons are found in the main target zone, Empyrean said it will run additional Combo Logs to confirm any oil pay zones.
In the event of a commercial discovery, partner China National Offshore Oil Company (CNOOC) can take a 51% participating interest in the development and production phase.
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