T&T: New oil discovered in Galeota

Dec 10, 2013 12:00 AM

Trinity Exploration and Production plc, the largest independent oil company focused on T&T, announced this country’s first and only discovery in 2013—50 to 115 million barrels of high quality crude oil. It is the first major discovery since Jubilee, announced in 2012.

The oil discovery was made at Trinity’s TGAL-1 exploration well within the Galeota license where it holds a 65 per cent interest, and is the operator of the field. State-owned Petrotrin has been holding the remaining 35 per cent since the field was Bayfield Energy’s. Trinity acquired the field through a reverse takeover of Bayfield in October 2012.

Trinity Chief Executive Officer Monty Pemberton said: “The TGAL-1 discovery is exciting news for all of Trinity’s stakeholders, and our team has done an excellent job in delivering this successful well safely. Trinity’s industrial thesis has always been to pursue low risk opportunities in T&T, which we believe is a prolific but under-exploited hydrocarbon province.

“This is the second successful exploration well Trinity has drilled on the Galeota licence since 2012 (the first being EG-8) and demonstrates the further resource potential of the block. Our team is now focussed on assessing development alternatives to move this project forward to field development planning (FDP) as soon as possible.” Trinity is evaluating whether further appraisal of this discovery is required and will shortly begin engineering studies to finalise a development concept to progress the project to FDP, the company said.

The TGAL-1 well was drilled to a total depth of 5,694 feet. The well was initially planned to be drilled to a total depth of 6,500 feet, but is currently being plugged and abandoned at 5,694 feet, as no hydrocarbons or reservoir quality sand were encountered below the 13-3/8” casing point at 4,362 feet. Only rarely do oil companies extract oil from the same exploration well. A production well will be separetely drilled to extract the oil. Pemberton said: “This will mean more capex (capital expenditure) and investment in the country.”

The statement from Trinity’s office in London, where the company is listed on the stock exchange, said: “Trinity has conducted extensive logging and sampling analysis to assess the reservoir characteristics and oil water contacts, and preliminary management estimates indicate gross original oil in place (OOIP) to be in the range of 50 to 115 million barrels of crude oil (mmbbl). It should be noted that these figures include estimated volumes in the NE TGAL-1 area (previously referred to as GAL-26).”

The Trinity operated TGAL-1 exploration well was spudded on October 31, to target an updip extension of the producing Trintes Field. Drilling operations were undertaken using the Rowan Gorilla III jackup rig. Rowan Companies plc, an offshore contract driller, came to T&T in October on a US$160,000 per day contract to drill for four oil and gas companies. The Gorilla moves on to Repsol after Trinity. To spud in the oil industry mean to carry out the initial drilling for an oil well.

Trinity stock shot through its previous ceiling of 134 pence and set a new record high in trading at 148 pence, becoming—by market capitalisation—a larger oil company than the UK’s Leni Oil & Gas Plc, Canada’s Niko Resources, Australia’s Range Resources, and Canada’s Touchstone. At 128 pence per share, the company’s market capitalisation was US$195.24 million, with Niko Resources at US$120.36 million, Range at US$43.24 million, Leni at US$27.52 million, and Touchstone at US$21.05 million.

In immediate reaction, oil analyst Nathan Piper, of RBC Capital Markets, which is also a joint broker for the company, said: “Trinity appears to have made a material oil discovery that should transform their reserves position and underlines the potential of the under explored, but proven areas of Trinidad.”

“The company estimates gross oil in place of 50-115 mmbbls with the potential to almost double Trinity’s existing 31 mmbbls proven plus probable (2P) reserves base. Development and appraisal options will now be assessed and due to the proximity to the production facilities on the Trinites field, first oil could be achieved mid 2015. Although more work is required to define the size of the prize, un-risked at the high end of oil in place, TGAL-1 could ultimately add 73 pence per share to our net asset value (NAV).”

On development concepts, Piper said: “Trinity will now incorporate the new well data with existing 3D seismic to determine the best development concept, if appraisal drilling is needed, before progressing the project to FDP. The proximity to existing infrastructure at Trintes could allow first production by mid 2015. The Galeota Block is located in shallow water in a relatively benign marine environment allowing for simple development options.”

Piper said “El Dorado” is next. The El Dorado well was spud in early December on the Pt Ligoure Guapo Brighton (PGB) license offshore western Trinidad in 60 feet water depth. Trinity has a 70 per cent interest in that licence. It is testing an undrilled fault block on the flank of the producing Brighton field around 2 kilometres from existing production infrastructure, and on success could be tied back rapidly, Piper said.

The 35 day well will drill to 6,138 feet total depth to test five stacked sand packages with gross unrisked  prospective resources of 13 mmbbls. Management holds a 51 per cent chance of success. “We hold upside/risked +30/-7p share for the well,” Piper said.

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