Anglo African Oil & Gas (LSE:AAOG) dipped 4.4pc to 10.46p on Thursday afternoon after updating investors on the progress of a competent persons report (CPR) for its critical well in the Republic of the Congo.
The company said that the release date of the CPR for well TLP-103C, located on the firm’s Tilapia licence, has been pushed back to the second half of May. It added that the delay reflects its request for new information to be included in the report. This came after it confirmed that oil from the well had moved to surface under its own pressure. originating from Tilapia’s Djeno reservoir, in January.
Following well-publicised delays, Anglo African first confirmed discoveries at Tilapia in the first weeks of 2019. Wireline logging at the well validated initial results identified during drilling the targeted R1/R2/R3 and Mengo reservoirs and confirmed oil columns amounting to an aggregate of 44m across the identified horizons.
In February, the firm rose to 10.5p when it announced that it hoped to begin producing from TLP-103C in April. At the time, it said it expected initial flow rates in excess of 1,500bopd for the first 14-18 months of operations. These are then expected to slow down to 400bopd for the remainder of the well’s life. The company believes it could generate around $1m per month in free cashflow at flow rates of 1,500bopd. Encouragingly, Anglo’s breakeven oil price will fall below $20/bbl in these circumstances.
Anglo plans to bring TLP-103C into production through a double completion, tapping into both the R2 and Mengo reservoirs. The Mengo horizon will require a one-off frack using Schlumberger equipment due to arrive in the Congo at the beginning of April. Once fracking is completed, the well can be brought into production. In February, Anglo African also stated that the production strategy it had laid out could be achieved through its existing cash resources.
Elsewhere in Thursday’s update, Anglo African said it had received a cash payment of $600,000 from the Congolese national oil company, Société Nationale des Pétroles du Congo (SNPC). This relates to costs incurred during the drilling of TLP-103C and the development of the Tilapia licence, and follows an initial payment of $663,000 made in March. According to Anglo African, the SNPC still owes it around $8.7m. However, it added that negotiations to exchange a portion of the state-backed business’s equity interest in Tilapia in exchange for writing off the debt are ongoing.
David Sefton, executive chairman of AAOG, said: ‘While we are keen to receive the CPR based on the results of the very successful TLP-103C well, the fact that oil has come to surface from the Djeno is very significant so we consider that a short delay to allow the inclusion of this data is worthwhile. We look forward to releasing the CPR as soon as we can. We are also pleased that SNPC continues to make payments to the Company and we look forward to providing an update on the licence negotiations in the near future.’