Members Only Post. Not for general release.Now on General Release.
The news from the City of Mammon. There’s the potential for a lot of activity in Wessex Exploration towards the end of this month as the follow-up well to the Zaedyus oil discovery is expected to complete the end of September 2012. Confirmed.
Drilling began on July 5/6. The new well, GM-ES-2, is well and truly on the way to adding extra oil figures to the already mouth-watering billion barrel plus initial Zaedyus find targeting ‘at least’ an extra 300 million barrels of oil.
The venture is primarily being “pursued” by a group of three majors. Shell are the largest stakeholder & Operator with a 45% interest, Tullow 27.5%, while Total have 25% respectively. The Zaedyus exploration well last year made a significant discovery in the Guyane offshore area. It encountered 72 metres of net oil pay in two turbidite fans. Importantly this proved that as anticipated the Jubilee play was mirrored across the Atlantic from West Africa. Tullow believes that the Guyane discovery could be larger than its Jubilee oilfield in Ghana. The figure of 4 billion plus barrels of oil is regularly being bandied around by City analysts and it is thought that the new discovery could contain at least ‘1 billion barrels or more’ of recoverable oil. “The (Guyane Maritime) prospects, as they stand, are likely to have a gross P10 estimate of over 4.15 billion barrels recoverable and statistical resource numbers are in the fullness of time likely to prove wide of commercial reality,” WH Ireland analyst Tom Elder said in a client note.
He added: “Given the experience at Jubilee, it is our view that the Zaedyus prospect is likely to ultimately be larger than Tullow’s previously indicated (P10 estimate) of 700 million barrels.” Even without drilling another well the analyst reckons Tullow could increase its resource estimates for the discovery. This would in turn make the Wessex interest more valuable.
The whole Zaedyus discovery looks like it is going to have to be reinterpreted significantly upwards from where it currently sits. A program is being thrashed out and will likely follow post completion of Zaedyus.
So where would this leave share-holders of Wessex Exploration? Well apart from the fact that the recent 10p takeover approach from Total was rebuffed by the company as analysts believe that it failed to take into account other Wessex assets including Wytch Farm and the Mozambique Channel, it also failed to recognise the potential for the increases in recoverable oil that should begin to come to fruition at the end of this month.
It’s looking ever more likely that Total or one of the other major partners will come back with an increased bid for Wessex who hold 1.25% of the Zaedyus discovery. It’s almost certain that Wessex will go. 15p Looks fair value to me. Watch this space. Get researching them. Time is of the essence!
ps Thanks for the emails re the typo errors. You pedants!