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Savannah Petroleum makes fourth consecutive oil discovery in Niger (SAVP)

Today, Savannah Petroleum (LSE:SAVP) announced its fourth consecutive discovery in Niger at the Eridal-1 exploration well and an extension to its drilling campaign. Preliminary results based on available data indicate that the well has encountered a total estimated 13.6m of net oil-bearing reservoir sandstones. Wireline logs indicate the reservoir to be good quality, and the available data suggests it’s light oil consistent with Savannah’s discoveries to date, and in line with offset wells observed across the basin. We have covered Savannah a number of times on ValueTheMarkets, most recently a week ago, when the company reported it had secured government agreement for an Early Production Scheme.

The discovery is part of the company’s ongoing exploration campaign in the R3 portion of the R3/R4 PSC Area in the Agadem Rift Basin (“ARB”), South East Niger. Savannah has elected to exercise the second of six individual options it has under contract with Great Wall Drilling Company Niger SARL. The rig will now mobilise to the Zomo-1 well site, located 12km from Eridal-1, where it will prepare to spud the Zomo-1 exploration well. Following the exercise of this option, Savannah will continue to have options for a further four wells, each of which can be exercised individually at Savannah’s discretion.

Andrew Knott, CEO of Savannah Petroleum, said: We are excited with the success we have delivered to date in Niger. Eridal-1 maintains our 100% exploration success record and marks our fourth discovery in the R3 East Area.  What was different about Eridal-1 was that we were targeting a structure which had previously been drilled in a down-dip location by a previous operator. Our technical team had a strong view that significant potential existed up-dip and selected the Eridal-1 well accordingly. We believe this has contributed meaningful oil resource additions to support the development of our proposed EPS.”

Early Production Scheme

Production tests are expected to be performed on at least two of Savannah’s discovery wells as a precursor to the Company’s plans to implement an Early Production Scheme (“EPS”). This was announced in an RNS on 8thAugustwhich revealed it had sagreed a legally binding Memorandum of Understanding (MOU) between Savannah’s Niger subsidiary, Savannah Niger and the Republic of Niger. The MOU further binds both parties to work together towards the realisation of the EPS and contains specific provisions relating to the actions each Party undertakes to conduct as well as setting out the key timelines associated with the project.

The testing is expected to require standard production completion equipment to be installed in the wells, enabling them to be connected to the proposed EPS. This well testing programme is currently being planned for later in the year after which Savannah will provide a resource and volumes report.

Knott comments: “We look forward to providing further updates on our drilling campaign and plans for the EPS over the course of the coming weeks and months.”

Author: Stuart Langelaan

Disclosure: The Author owns shares in the company mentioned above

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