Anglo African Oil & Gas (LSE:AAOG) sat at 9.3p this morning after spudding a new well on the Republic of Congo-based Tilapia field just weeks after abandoning its first attempt at drilling the prospective site. The business, which was trading up 0.8pc as at writing, said it began work on the well – called TLP-103C – yesterday and expects it to take 64 days to complete.
The well will initially target the current R1/R2 producing horizon, which Anglo African expects to intersect within around 25 days, before making an appraisal of the deeper Mengo horizon. It will then move to an even more in-depth exploration prospect in the Djeno horizon, from which an adjacent field is currently producing at a rate of 5,000bopd. Should the well perform by geological models, it will then be extended to target a final horizon called Vandji.
Anglo African is drilling TLP-103C from a newly constructed pad and has put in place engineering enhancements to mitigate risks caused by shallow unstable formations. The precautions follow the business’s decision to abandon the drilling of its initial TLP-103 well last month.
The organisation made the move after its drilling contractor said it had experienced a ‘topside issue affecting its rig’ before reaching any of its target horizons. The two firms jointly decided to find a new location, move the rig, and re-spud the well as TLP-103C.
Although the well now appears to be back on track, investors will likely be looking for more details around the financial implications of the delay. Anglo African has previously said it had offers of debt financing available to it sufficient to meet any cost overruns related to the delay. The claimhas raised questions over whether this will take the form of a convertible loan or a loan note and, additionally, around what price any such agreement will be executed or delivered.
Regardless, Anglo African’s executive chairman David Sefton said he was happy with firm’s swift resolution to the issues:
‘I am immensely proud of the work by the entire team which has enabled TLP-103C to be spudded within only five weeks of the suspension of drilling at TLP-103. Further, in parallel with the work of the team to construct a new pad, which is 500 square metres in size, and safely reposition and inspect the rig, the engineering team has amended and enhanced the engineering plan for the Well. Thishas also required the sourcing of critical equipment on very short notice.
Author: Daniel Flynn
The author does not own shares in the company mentioned in this article