Anglo African Oil & Gas PLC (LON:AAOG) has struck oil at its Tilapia licence in the Republic of Congo.
The oil and gas developer said the TLP-103C well intersected the Mengo horizon on Christmas Eve (Monday) and that hydrocarbons were encountered.
Anglo observed oil and gas shows throughout the entire 50 metres of sandstone beds encountered. Hydrocarbon pay thickness will be confirmed by wireline logging data and pressure points.
Additionally, three new potential pay zones have been encountered. These zones, formed by sandstones, showed a positive log response and hydrocarbon shows.
They will be investigated with MDT logging to test their potential. These new zones were not encountered in the TLP-101V, a previous well already producing at the Tilapia site.
The plan now is to complete the current well section and then pause drilling in order to undertake a full suite of Schlumberger wireline logging.
Following wireline logging, Anglo will continue drilling towards the deeper Djeno horizon, which is known to be a “prolific producer” in neighbouring fields.
“This success in the Mengo is significant,” said executive chairman David Sefton.
“The Mengo has, depending on the exact characteristics of the reservoir following logging and eventual testing, the potential to provide material increases in production, and cash flow, to the company.”
He added: “A genuine surprise, albeit a very welcome one, has been to encounter potential pay zones above the Mengo, in layers where this was thought unlikely due to previous well data. These results indicate a well-developed on-shore/offshore hydrocarbon system underlying Tilapia and validate our confidence in this asset.”
House broker finncap said that Anglo African has ended the year on a high.
This zone looks to be larger and have higher net pay than expected, plus three new potential zones were also encountered, which goes a long way towards de-risking the Mengo, which was ascribed a 60% chance of success in the competent person's report (CPR).
"However, this is expected to be a tight reservoir, so stimulation and a flow test will be needed to fully demonstrate commercial viability.
"Nevertheless, our 17p/sh risked-NPV estimate for the Mengo alone rises to 29p/sh if fully de-risked, demonstrating the material upside potential on offer from this well.
"After a troubled start, this well is starting to deliver."
Shares rose 10% to 9.7p on Thursday morning.
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