Victoria Oil & Gas (AIM: VOG) said well La-105 at its flagship Logbaba gas project in Camroon has reached a total depth of 8,920 ft (feet), having encountered multiple gas bearing sands at depths between 6,017 ft and 8,330 ft that could be correlated to those found and tested in the nearby well La-103, which flowed at rates from 5 to 12 mmcf/d (million cubic feet per day) of gas from individual sands when drilled in 1956.
Shares in the company added 6.7% on the news.
The data obtained whilst drilling showed in excess of 300 feet of gross pay and also indicated the presence of over-pressured shale gas in a significant interval. The well is currently being logged prior to its completion as a development well, after which a 7-inch liner will be run to isolate the sands for future testing and production.
“We are pleased that Well LA-105 has now reached total depth and encountered over 300 feet of gross pay. Notably, the presence of gas in the shale could add upside to previous management interpretations. We will provide further detailed information to the market once the well logs have been completed,” said VOG chairman Kevin Foo.
The company is now gearing up to drill La-106, the next well at the Logbaba field.
The proven and probable reserves for Logbaba are currently estimated at 106 billion cubic feet. GeoDynamics Research (GDR) is currently commencing a passive seismic spectroscopy survey over the entire license area, which will take measurements of 50 locations around the field to identify hydrocarbon bearing areas. Initial findings of the survey are expected by mid-January this year.
VOG also develops the West Medvezhye gas field in Russia, planning a second passive seismic spectroscopy study over a large area of the northern and eastern section of the licence block this year. Studies suggest show that this section includes an extension of the super-giant Medvezhye field and VOG believes it stands the best chance of finding stratigraphic traps with superior reservoir quality there.
Fox-Davies Capital raised its price target for the stock to 8 pence from 7p in reaction to the news, and reiterated its 'buy' recommendatiion for Victoria Oil & Gas.
The broker said in a note that La-105 has reached target depth about two months later than expected, due to problems encountered while drilling and that also resulted in a more cautious operational approach adopted by the company subsequently. "We believe it was essential for VOG to carry out the drilling of this well successfully rather than on time, despite the additional costs; having done so is a notable achievement."
"Overall these results are very positive for the company and de-risk the Logbaba project beyond our initial assumptions. Therefore we are increasing our probability of success from 75 percent to 90 to resulting in an increase in our risked NAV calculation which is somewhat compensated by a higher number of shares from additional share placings," the broker added.
Disclosure: I do not hold a position