www.victoriaoilandgas.com
Victoria is an independent oil and gas exploration and production company with projects in Africa and the FSU. The Company’s principal assets are 95% of the Logbaba gas and condensate project in Cameroon and 100% of the West Medvezhye gas field in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia.
Victoria Oil & Gas spuds La-106 well at Logbaba gas and condensate field, to commence La-105 testing
Victoria Oil & Gas (AIM: VOG) has spudded well La-106 at its Logbaba gas and condensate field in Cameroon after changing its design to target the most prospective areas of the existing discovery.
La-106, which is the second well to be drilled by the company on the field, will twin well La-101, which was drilled by Elf SEREPCA in 1954. The well will be drilled from the same well-pad as well La-105 and will be deviated to a bottom-hole location around 390 metres north-west of La-101 to access one of the most prospective areas of the existing discovery.
Last week, the company said that results from a passive seismic spectroscopy survey at showed a major and previously unknown potential hydrocarbon accumulation, while also indicating best prospectivity in the existing structure to the north of it, which, as a result, impacted the design of La-106. The proposed depth of the well is 8,700 ft (feet), and drilling is expected to take 60 days.
While La-106 is being drilled, testing of the gas-bearing zones of La-105 will be undertaken and this testing is expected to commence in February.
The company said that the La-105 open-hole log data and the passive seismic survey results are expected to justify significant additional proved and probable reserves to the 104 Bcf (billion cubic feet) of gas for the field estimated by RPS Energy in 2008.
VOG is looking to supply natural gas to industrial customers in Douala, saying that half the existing market has already signed gas off-take contracts and letters of intent at a price of US$16 per tcf (thousand cubic feet) of gas.
The proven and probable reserves for Logbaba are currently estimated at 106 billion cubic feet.
Broker Fox-Davies Capital (FD Capital) welcomed the news, saying that the well was spudded on time and operations at Logbaba were now running smoothly after a tight deadline imposed by the authorities and the onset of the rainy season caused problems for the drilling operations at La-105.
FD Capital pointed out what it said was an interesting part of the announcement, which was that the testing of La-105 will start while La-106 is being drilled instead of waiting until the completion of drilling. The broker said it took a lot of encouragement from that as the company made it a priority to get an updated report as soon as possible.
The note said that La-106 will target the “sweet spot” unravelled by the survey and will expectedly penetrate better reservoirs than any other wells previously drilled at the project. Should that be the case, it will materially de-risk the positive passive seismic anomaly to the north of Logbaba, taking the stock to a materially higher price level, said FD Capital, adding that the project was turning out much better than expected and the reserves in the licence could be a multiple of initial expectations, making the broker’s target of 9 pence look “very solid” with a prospect of an equivalent size to Logbaba contributing an additional 8 pence of value.
The 'buy' recommendation for the stock also was retained.
