With evidence of an active petroleum system now confirmed after two test wells in Namibia's 6.3-million-acre Kavango Basin, the game is afoot with 2D seismic and a 6-well exploration drilling campaign that hopes to put this final frontier nation definitively on the commercial oil map. Mentioned in today's commentary includes: Chevron Corporation (NYSE: CVX), Royal Dutch Shell plc (NYSE: RDS-A), BP p.l.c. (NYSE: BP), TotalEnergies SE (NYSE: TTE), Baker Hughes Company (NYSE: BKR).
Recon Africa (RECO, RECAF), the junior explorer behind the new play, and its JV partner NAMCOR, Namibia's state oil company, think they might have drilled into a reservoir in their first test well, and they are very excited about what comes next. So, let's drill down here to better understand exactly where we stand with exploration in the Kavango Basin, and why many of us are so excited about it.
Namibia Is Set To Boom
The purpose of the first two stratigraphic wells was to determine evidence of whether Recon Africa is sitting on an active petroleum system. These wells were not drilled with the intention of completion for production, which comes at a later stage if all goes well, though the first well has been left in a state that will enable re-entry for flow testing.
ReconAfrica's first test well (6-2) now has a complete set of data. Complete data from the second test well (6-1) is being assembled for submission to and must be accepted by the Government of Namibia before the company can release it in the public realm. We expect that shortly.
What we know so far from the first test well is that data shows three main intervals with a variety of oil shows and associated gas shows. Drilled to a total depth of 2,294 meters, this well had over 250 meters of hydrocarbon shows.
Mud-Logging Results Are Positive
Mud-logging is said to be one of the most critical elements of exploration—and we believe it's crucial for investors in terms of determining the potential value of a company's exploration results.
It used to be that mud-logging was a less comprehensive affair involving the recording of depth and the describing of the lithology of formations encountered in drilling. Those results would then determine whether the formations contained hydrocarbons.
But, as Schlumberger notes, mud-logging has expanded significantly in recent times. Today, it involves an impressive collection of high-tech sensors, including gas chromatographs, weight-on-bit and mud-pit level indicators. Advanced tech mud-logging now combines a basket of surface indicators that give us an incredibly concise record of subsurface geology and hydrocarbons.
ReconAfrica's (RECO, RECAF) mud-logging results are quite impressive.
Conducted by U.S.-based Horizon Well Logging Inc, mud-logging for the 6-2 well returned 52 intervals with shows. All of that was documented by U.S.-based Horizon Well Logging Inc, and the description is available on the ReconAfrica website.
Samples are described every 3 meters, and any samples that have evidence of oil are described, and then the oil itself is extracted and rigorously evaluated for quality. Likewise, gas is sampled directly from the flowline and sent to a chromatograph, which measures the amount of gas and some basic properties.
Horizon CEO Doug Milham noted: "Horizon is proud to be part of the team at ReconAfrica and the potential resource that has been discovered with their first two wells. The presence and quality of oil and gas shows encountered while drilling the 6-2 and 6-1 wells was remarkable, with many positive indicators of hydrocarbons encountered throughout both wells. Our sample logging data and analysis has identified significant intervals of oil and natural gas in each of the two wells drilled, with varying characteristics from multiple zones. This is an exciting oil and gas exploration project with world-class potential."
What this mud-logging data shows most clearly is evidence of the presence of a conventional petroleum system with many light oil shows. That, in turn, means the company has significant support for a comprehensive 2D seismic program th...
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