Sign up USA
Proactive Investors - Run By Investors For Investors

COPL will focus on exciting Noa project - Shard Capital

Exciting assets in Nigeria now take centre stage for COPL, according to Shard Capital analyst Barney Grey
Offshore oil operations
A well could appraise the Noa discovery later this year

Canadian Overseas Petroleum Limited's (LON:COPL) management will now put all its attention on its exciting interests in Nigeria, according to Shard Capital.

Analyst Barney Gray, in a note, says the failed exploration well offshore Liberia - for which all costs were covered by US oil major Exxon – was a disappointing setback for the company but also “very much part and parcel of high risk / high impact oil and gas exploration”.

As Gray highlights the company still has exposure to an 80% interest in the OPL 226, host to the offshore Noa discovery, via the ShoeCan joint venture.

He says that this project offers exciting exposure to Noa’s near-term cash generation potential, which can be unlocked by drilling an early appraisal/production well.

“ShoreCan’s technical team has identified several locations to test both the Noa-1 discovery with a low-risk appraisal well, potentially near the end of 2017,” the analyst said.

“A successful result here could be put on early production via an FPSO and start generating cash for the JV as early as 2018.

“In combination with this plan for an early production system, ShoreCan is also evaluating a full-scale development plan for Noa-1 and adjacent prospects. Such a project could consist of 29 producing wells targeting over 250 mmbbls of oil drilled over 12 years with full production phased in over a ten year period.”

According to Gray, the Noa project would require substantial funding or a farm-out of ShoreCan’s stake.

The cost of starting an early production project is estimated by Gray at as little as US$40mln, which he believes could be covered by debt financing secured on the field’s initial production.

“Although Mersurado-1 represented a setback for COPL, dry wells are a fundamental element of the junior E&P sector,” the analyst added.

“More importantly, COPL has negligible financial exposure to Liberia and now has the opportunity to focus management time on Nigeria.

“Given that Noa-1 represents an early production project with cash flow generation potential, we believe that COPL, through ShoreCan, will seek appropriate funding solutions in the current year in order to accelerate its renewed strategy.”

View full COPL profile View Profile

Canadian Overseas Petroleum Limited Timeline

Related Articles

oil barrels in a stack
February 21 2017
Oil is flowing from the Opuama field into the market, now that Eland has established a shipping operation.
rubbish tip
July 31 2017
Its G3-UHt system transforms rubbish into electricity with no toxic by-products and effectively zero greenhouse gases
pic of VOG's gas facility
La-107 had successfully reached its target depth of 3,180 metres
Copyright ©, 2017. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use