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PROACTIVE NEWS SUMMARY: Genel Energy, Range Resources, Red Emperor, Oracle Coalfields, Nokia

Published: 11:44 12 Apr 2012 EDT

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Investors in London had plenty of updates from oil and gas companies to digest today.

Genel Energy (LON:GENL) and partner DNO released an operational report from Iraqi Kurdistan, while Red Emperor Resources (LON:RMP) and Range Resources (LON:RRL) said their Shabeel well in Puntland has indicated oil.

Red Emperor and Range added that more work was needed to test the results.

The Shabeel well, which is being drilled by Horn Petroleum, is currently at a depth of 2703 metres and has just completed the setting of the 9 5/8" casing, Range said.

At a depth of approximately 1660 metres, a 355 metre section of Upper Cretaceous sands and shales of the Tisje/Jesomma Formations exhibited both oil and gas shows and a potential pay zone of between 12 and 20 metres.

“Attempts to sample formation fluids using a wireline formation tester were not successful and the zone will require cased hole testing to confirm whether they are oil bearing,” Range said. 

At a depth of 2015 metres, a thick section of tight limestone and shales was encountered and extended to the present depth of 2703 meters, which is believed to correspond to the Upper Cretaceous Gumburo Formation, Range said.

The firm added that the forward plan with Shabeel will be to drill ahead to the originally planned depth of 3800 metres to evaluate the primary and secondary reservoir targets in the Lower Cretaceous and Jurassic intervals equivalent to the main productive section seen in the analogous fields in Yemen. 

A testing programme including the zones of interest seen to date and any deeper potential pay zones identified will be agreed with partners at that time. 

On completion, the rig willl move to the Shabeel North location.

Meanwhile, Genel said operator DNO is preparing to test oil shows discovered in the Peshkabir-1 exploration well on its Tawke licence.

Genel has a 25 per cent stake in the licence that also hosts the Tawke field, which was producing around 60,000 barrels a day by the end last year. 

Peshkabir-1 targeted a large undrilled feature to the west of the Tawke field. With a target depth of 4,092, it was the deepest well drilled by DNO in Kurdistan to date. 

Oil shows were observed in three potentially producing intervals (in the Cretaceous, Jurassic and Triassic), DNO said. 

Wireline logging and coring operations are now underway. And DNO plans to carry out a minimum of five flow tests - two in the Triassic, one in the Jurassic and two in the Cretaceous.

“Peshkabir-1 is the first well in our extensive exploration programme of 7 high impact wells that we are drilling over the next 18 months, and we look forward to the completion of the testing programme," said Genel chief executive Tony Hayward.

"Operations on the Tawke field continue according to plan and we are on track to increase capacity to 100,000 barrels of oil per day by the end of 2012.”

Meanwhile, DNO says that the Tawke-15 well has now tested at 7,000 barrels a day following a work-over. Prior to the programme, the well had been producing but it was shut in due to low productivity.

DNO is also currently drilling the Tawke-14 well. The well has a target depth of 2,665 metres and it is now at a depth of 1,800. Tawke-14 is designed to confirm and delineate the potential of the Cretaceous in an untested up-structure location.

Another article by Proactive Investors was dedicated to Oracle Coalfields (LON:ORCP), whose bid to develop Pakistan's first major coal mine was boosted today - as it was issued a mining lease.

The long awaited lease was granted for a block on the Thar coalfield by the country's government and extends for 30 years and may be renewed for a further three decades.

Earlier this year, the firm told investors that a feasibility study on the field in Sindh province underlined the project's “technical and economic viability” and showed a JORC-defined 529 million wet tonnes in the area to be mined.

Oracle's chief executive Shahrukh Khan said: "This is a significant step for Oracle as we move towards becoming a major coal producer in Pakistan. 

"The company continues to achieve its objectives and today's news builds on our recent technical feasibility study which showed that, in phase 1 of our mining area, we have proven JORC coal reserves of 113 million wet tonnes from the JORC mineral resource of 529 million wet tonnes."

The company boss added that the need for coal to fuel rising energy demand in Pakistan was well understood and said Oracle would now implement a pre-development programme before bringing the mine into production.

The mining lease is for to 66.1 sq km of block VI of the coalfield, which lies 380 kilometres from Karachi and covers a total area of 9,100 sq km.

Thar lies close to good infrastructure, with ongoing development of a road and power network in the region.

In February this year, the company said total capital expenditure for an open-cast development was estimated at US$610 million, including US$224 million for mining equipment.

This will allow the company to produce five million wet tonnes of lignite coal per year. However the plan initially at least is to mine around 1 million tonnes a year from 2013.

Total cash costs were put at US$42.21 per wet tonne, and the life of the mine is estimated at 23 years. 

The product has been confirmed as suitable for power generation.

In other news, US broker Morgan Stanley predicts worsening pressure on phone manufacturer Nokia (NYSE:NOK) after its warning of €126 million in losses for the first half of this year.

The broker slashed its price target for Nokia from €3.80 to €2.60 today and reiterated its ‘underweight’ rating on the stock.

Nokia blamed strong competition for smartphone sales as its own Lumia range, which runs the newer Windows Phone software, has struggled since its launch in November.

Apple and Samsung currently dominate the market and Nokia has been left behind since the launch of the first smartphones, despite being the former market leader for mobile phones.

Nokia has now been rocked by a software bug that means the Lumia 900 smartphone occasionally loses its data connection.

Morgan Stanley remains “cautious” longer term on Nokia’s cost structure and competitive threats.

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