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Victoria Oil & Gas says work at Logbaba gas project on track as interim losses narrow

Victoria Oil & Gas PLC (AIM: VOG) reiterated that work on the La-106 well at its Logbaba natural gas and condensate project in Cameroon is progressing as planned as it reported narrowing losses for the first half to November 30 2009.

At present, La-106 has reached a measured depth of 4,450 feet, and progress to date as been excellent. The company is on course to reach total depth of around 8,700 feet within the 60 day schedule, possibly even earlier.

The design of La-106 has been modified following the passive seismic spectroscopy survey to favour the northern flank of the sands intersected by La-101 in 1955 and access new areas with potentially higher prospectivity. “If the drill bit continues to perform, we will have first data back from logging of this new well in early Q2,” it said.

The comments came alongside interim results which showed pretax losses narrowing to US$4.47 million from US$9.32 million a year earlier.

Only last week, the company reaffirmed its commitment to bring in revenues from Logbaba as soon as possible after results from a passive seismic spectroscopy survey suggested that the best areas on the field were yet to be explored and discovered a much larger prospect within the license block, which the company said could potentially change its size and future.

In the letter to shareholders released last week, VOG said that it was looking to design an integrated strategy marketing and monetisation the Logbaba resource that will be flexible enough to adapt to the changing nature of the field, while working with local consumers to tailor the pipeline construction process to the demands of the market.

Following the results of the study, the currently drilled well La-106 was deviated to a bottom-hole location north-west of well La-101 to access one of the most prospective areas of the existing discovery.

Another well at the property, La-105, has recently been completed as a production well after confirming the presence of at least 65 ft (feet) of good quality gas-bearing sandstone reservoir and another 260 ft of gas-bearing sands that could potentially be productive.

The company has been in touch with local and international banks with regards to the funding of the pipeline construction and expected further progress as solid data from the wells becomes available.

VOG also provided an update from its other project, the West Medvezhye gas field in Siberia, where preparations for an IPDS passive seismic spectroscopy survey on the north-eastern section of the block are already underway with the survey set to start in March at the earliest. The company is currently focusing on necessary permitting, import of equipment and construction of the ice roads to the exploration area.

Targets for new wells at West Medvezhye will be picked after surveys are carried out and their results are analysed. VOG is considering undertaking surface geochemical analysis and gas tomography, low cost exploration tools that have been extensively used in the Siberian tundra as a method of de-risking large areas of unexplored acreage before a conventional seismic survey and drilling.

Disclosure: The author holds no positions in the company