Oil and gas news summary: Range Resources, Cove Energy, Chariot Oil & Gas, Enegi Oil,

Range Resources (LON:RRL) and partner Red Emperor Resources (LON:RMP)this week updated investors on their closely followed exploration campaign in Puntland, Somalia.

On Thursday, the companies told investors that drilling at its highly anticipated Shabeel-1 well in Puntland, Somalia had been suspended for further testing.

Operator Horn Petroleum said the drill had reached a total depth of 3,470 metres, having encountered a metamorphic basement at 3,430 metres. The original target for the well was 3,800 metres.

Keith Hill, chief executive of Africa Oil, which has a 60 per cent stake in Horn Petroleum, said: “We are very encouraged by the results of the Shabeel well which appears to have confirmed oil bearing sands in two zones.

“This has very positive implications for the prospectivity of the basin.”

A day later, Managing director of Range Peter Landau said Shabeel-1 could produce up to 130mm barrels of recoverable oil.

He added that based on Range’s internal technical team’s review of the net pay zone and results to date, a successful flow test could result in 70 to 130mm barrels of recoverable oil from the well.

Of that, 14 to 26mm bbls would be attributable to Range.

“The zone needs to be commercially flow tested and this will be undertaken after the completion of the second well, Shabeel North, which will spud early June,” he said.

“It is also important to remember that this is the first hydrocarbon well drilled in the Dharoor Valley for over 50 years and it is a massive credit to all involved, namely Horn Petroleum, the Puntland Government and the local Puntland communities that the well has been successfully drilled to date,” he said in an interview with Open Briefing.

Earlier in the week, Cove Energy (LON:COV) announced a major new discovery off the coast of Mozambique.

It follows some spectacular results from the Golfinho exploration well in the now world class Rovuma Basin, which point to a recoverable resource of 17 to more than 30 trillion cubic feet of gas.

Golfinho, which is 20 miles north-west of the existing Prosperidade Complex, tested at around 100 million cubic feet a day.

Anadarko is the operator of Area 1 Rovuma Offshore, which hosts Golfinho, with a 36.5 per cent stake. Cove, meanwhile, is one of the lesser shareholders with 8.5 per cent.

However the figures involved with this discovery are so large that this week’s announcement is bound to have a material impact on Cove’s valuation.

Chief executive John Craven said: “We are thrilled at the success of the Golfinho exploration well, our eleventh successful well offshore Mozambique.

“This new gas accumulation is independent and separate to the Prosperidade gas complex and with successful appraisal could be advantageously developed, given its close proximity to shore and the fact that it completely enclosed in Area 1″.

On Monday, peer Chariot Oil & Gas (LON:CHAR) saw its shares fall almost 40 percent in early trade after it plugged and abandoned the Tapir South exploration well, off the coast of Namibia.

Hydrocarbons were discovered, but not in sufficient quantities to be commercial.

Chief executive Paul Welch said: “Whilst the results of the Tapir South well are disappointing, this is the first well of a longer term drilling campaign within a frontier region and only the second well ever to have been drilled in the Namibe basin.

“Our understanding of this basin is rapidly improving and we expect this well to provide more information on the character and maturity of the potential source rocks when we carry out detailed analyses on the recovered samples.

“These analyses will provide invaluable information for improving the assessment of source risk on other prospects in close proximity whilst also furthering our knowledge of the region.”

Enegi Oil (LON:ENEG) did better on Monday, seeing its shares shoot up 30 percent after it said its Garden Hill South discovery in Canada is larger than first thought.

It follows the latest results from well PaP#1-ST#3, which were independently assessed by McCaffrey Consulting Services.

McCaffrey said it is yet to see pressure depletion from PaP#1-ST#3, suggesting the reservoir is larger than first estimated.

There are also knock-on implications for daily flow rate, which is also expected to increase.

A 2007 competent persons report suggested GHS estimated there were 61.5 million barrels of oil in place as well as 117 BCF of gas.

Ophir Energy (LON:OPHR) also had positive news to report to investors this week. The company and partner BG (LON:BG.) have made another major gas discovery offshore Tanzania, the fifth consecutive hit on their blocks in the region.

The Mzia-1 well in Block 1 intersected a 178m gas bearing column and 55m of net pay in the Upper Cretaceous, Ophir said.

The mean average resource was estimated at 3.5 TCF with “significant” potential upside.

BG and Ophir had already discovered an average 7 TCF of gas from their first four wells of the offshore Tanzania programme, but said this week the Mzia-1 result will add substantially to this total as well as opening the Rovuma Delta Upper Cretaceous intraslope play.

Ophir holds 40 per cent of Blocks 1, 3 and 4; BG operates the blocks with a 60 per cent stake.

In other news in oil and gas, Kurdistan–focused Genel Energy (LON:GENL) sharply increased production in its latest quarter and expects output to stay at the higher level over the remainder of the year.

Net production for the first quarter of 2012 averaged 45,500 barrels daily, 27 per cent higher than a year ago.

Revenue guidance for 2012 remains unchanged at US$250-300 million supported by strong sales into the domestic market, it added.

The company, which is run by former BP boss Tony Hayward, intends to drill seven wells across its acreage in the next twelve months.

In the meantime, Tethys Petroleum (LON:TPL, TSE:TPL) has been awarded a new oil field in Uzbekistan, from which it says there is good potential to increase production.

The Chegara field currently has limited production from three wells and lies 14 km south-west of the firm’s existing North Urtabulak asset.

It has been the subject of minimal drilling and Tethys believes that with more work, it can increase production “substantially”.

The deal at Chegara is for a 25 year production enhancement contract.

Tethys also announced this week it had signed a memorandum of understanding (MOU) with NHC Uzbekneftegaz concerning a potential exploration agreement for a block in the North Usyturt basin in Uzbekistan.

Elsewhere in the sector, Thailand focused oil and gas firm Coastal Energy (LON:CEO, CVE:CEN) said it recorded record production, cashflow and earnings in the first quarter of 2012.

Total production increased by 125 per cent to 22,773 barrels of oil equivalent per day (boepd) in the three months to March 31, it told investors.

That compared to 10,125 boepd in the same period in 2011.

Offshore production reached 21,031 barrels a day with the inclusion of both platforms at Bua Ban North, while onshore, production was 1,742 boepd – an increase from levels seen in the fourth quarter – as natural gas demand recovered after flooding in Thailand late last year.

Finally, Solo Oil (LON:SOLO) has raised £150,000 from its equity drawdown facility as it prepares to test its recent discovery in East Africa.

Solo issued 32.3 million shares at a “small premium” to the market price and will use the money to fund its 25 per cent share of the testing of the Ntorya-1 well gas discovery in the Ruvuma Basin in Tanzania.

In February, Solo and partner Aminex (LON:AEX) reported the discovery in a 25 metre (80 foot) gross sandstone interval at Ntorya.

The drawdown has been taken from at three year £10 million equity line facility with Dutchess Opportunity Cayman Fund.

Source: Interactive Investors