Australian exploration junior Pancontinental Oil & Gas (ASX: PCL) and its larger farm-in partner Tullow Oil (LSE: TLW) are on the verge of spudding the highly anticipated Cormorant-1 oil well offshore Namibia.
In a presentation to the market today, Pancontinental said the contracted drillship Ocean Rig Poseidon was currently in the southwest African country, being readied to commence drilling in September.
Cormorant is one of four large prospects mapped in a cluster on 3D seismic, all within the Tullow-operated offshore exploration block PEL 37.
Alone, Cormorant has the potential to contain prospective resources of 124 million barrels of recoverable oil on an unrisked best estimate basis. Collectively, the four prospects have been estimated to hold up to 915MMbbls.
Cormorant-1 will be drilled in a water depth of 545m and is expected to take 34 days to reach total depth.
Pancontinental chief executive John Begg said this well would be a “highly watched test of the Walvis Basin, that is one of two, separate oil-prone regions off Namibia in which Pancontinental has material acreage and ownership positions”.
Pancontinental is hoping the well will be a game-changer for the junior company.
“The greatest value-adding moments for oil and gas exploration companies come via the drill bit – the discovery of large volumes of oil or gas with clear commercial potential,” it said in the presentation.
PEL 37 has been operated by Tullow since 2013, when the UK major farmed into Pancontinental’s then 95% stake in the block.
India’s largest public company ONGC then farmed into Tullow’s interest for a 30% stake, leaving Tullow with 35%.
Pancontinental effectively has a 20% interest in the block through its 66.7% ownership of subsidiary Pancontinental Namibia, while Africa Energy Corp holds an effective 10% stake via the remaining third of the subsidiary’s equity.
Pancontinental is being free carried through the exploration program and will receive A$7.3 million from Africa Energy Corp upon the spud of Cormorant-1.
Local partner Paragon Oil & Gas holds the remaining 5% interest in the block.
More Namibian oil
Earlier this year, Pancontinental was awarded another offshore Namibian block, PEL 87. It currently operates the block with a 75% stake.
According to the company, the block is already showing multiple leads covering hundreds of square kilometres with “huge volumetric potential for oil”.
Pancontinental is hoping to attract strong partners in this acreage, as it did with PEL 37. The company said further news flow regarding this permit would be “forthcoming in the near term – in particular, documenting the size of the recoverable oil resource potential for the mapped leads”.