Oil and gas analysts who follow London-listed Afren were upbeat about the company's prospects Tuesday after it reported success at its Okoro East exploration well that is located offshore south-east Nigeria.
Afren, which is mainly focused on exploration and production in Africa, said that the company has made a new oil discovery at Okoro East well, having encountered 549 feet true vertical thickness (TVT) of net oil pay and 41 feet of net gas pay in "excellent quality reservoir sands".
The Okoro East exploration well was spud on Dec. 18 2011 and reached a total measured depth of 8.751 feet (8,016 feet of true vertical depth) with the jackup Transocean Adriatic IX (350' ILC).
The well successfully encountered oil in the Tertiary reservoir sands, equivalent to those that have been developed and are in production at the Okoro main field, in addition to the deeper, previously-unexplored reservoirs. The discovery of significant pay in these previously-unexplored zones "opens up further prospectivity at similar levels" on the main Okoro field and elsewhere on the block, said Afren.
Analysts who follow the firm reckon the discovered oil could be brought on line soon.
"We would expect Afren could develop the tertiary sands that are currently in production at the Okoro field relatively quickly, but the discovery in the deeper intervals could be large enough to be a stand alone development, in our view," said investment bank Citigroup in its research report on the company Tuesday.
Jefferies International – the New York-based banking group – noted that the existing infrastructure "provides opportunity for some quick tie-backs". "Afren currently has the 25,000 barrels of oil per day-capacity FPSO (floating production storage and offloading vessel) on the Okoro field," its analysts wrote Tuesday.
"The most recent production update stated current production was 17,000 bopd. In addition, the existing well head platform has two free well slots. This could allow the company to drill several production wells in the near term and tie it into existing facilities, increasing short term cash flows."
Meanwhile, analysts at fellow investment bank Credit Suisse agreed that at least part of the Okoro East discovery "can likely be monetized quickly using the two available slots on the existing Okoro platform".
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