Rialto Energy Limited, the West African exploration and production company with a focus on Cote d'Ivoire, announces its audited final results for the year ended 30 June 2012.
CI-202 - Cote d’Ivoire (Rialto Working Interest: 85%, Paying Interest: 95%)
Block CI-202, offshore Cote d’Ivoire comprises an area of 675km2, historic drilling activity consists of 13 wells, the first of which spudded in 1978, 12 of these wells found or tested hydrocarbon. As a result there are four oil and gas discoveries on the block; Gazelle, Hippo 1, Bubale, and Addax, all located in water depths of 50 to 100 metres, and all believed by the Group to have significant potential. Presently, these discoveries are assessed to have gross mean contingent resources of 50mmbbls of liquids and 396bcf of gas as per a Competent Person’s Report (CPR) done by RPS in September 2011.
Following approval of the Gazelle development plan in December 2011, a 25 year exploitation area has been granted over the Gazelle field. As part of this approval and to ensure commercialisation of Gazelle’s gas resources, the Company executed a Gas Sales Memorandum of Understanding (MOU) with the Government of the Republic of Cote d’Ivoire. The Gas Sales MOU contains the essential terms for a final, binding gas sales agreement for deliveries of gas of up to 100mmscfd. Negotiation on the terms of the final gas sales agreement is ongoing and finalisation is expected to be executed ahead of any final investment decision (FID) for the Gazelle Field.
The appraisal and development drilling of the Gazelle Field commenced in March 2012, with the spudding of the Gazelle-P3 well. In addition to the development opportunities associated with the existing oil and gas discoveries, the Company has identified an exciting inventory of exploration prospects and leads which will be targeted with future drilling.
Seismic acquisition and reprocessing
A block-wide, 891km2 3D seismic acquisition was completed in mid-January 2012. Processing and interpretation of the newly acquired data is ongoing. Initial seismic data are very encouraging, yielding additional prospectivity over the areas previously devoid of 3D seismic data.
This data is providing greater understanding of existing discoveries in CI-202 and will firm up potential high impact exploration targets. The seismic survey fulfilled all seismic commitments for the Licence. In order to allow the full prospectivity of the Block to be assessed, the planned 25% relinquishment in May 2012 has been delayed until 31 October 2012.
First phase Gazelle appraisal drilling programme 2012
The first of the three wells, Gazelle-P3 was spudded on 12 March 2012. The Gazelle field has been partially appraised by 5 previous wells which established reservoirs in Cenomanian sands which onlap an Albian high. The Field is divided into north and south areas by an east west trending fault close to the crest of the structure.
The P3 well targeted sands to the North of this fault, previously tested by the Gazelle 2 and Ivco-14 wells.
Mechanical issues with mud pumps and other rig equipment resulted in the drill-pipe being stuck on 26 March 2012, before the well reached any of the Cenomanian objectives. The rig issues were rectified and the well was mechanically sidetracked to P3ST1.
The well (Gazelle-P3ST1) was drilled to target depth (TD) on 22 May 2012. The key result from this well demonstrated a 200 metre vertical extension of the lowest known gas (LKG) in the Lower Cenomanian (LC-2) gas reservoir, and communication with the Gazelle 2 sand up dip (the LC-2 gas reservoir had been previously tested at rates of up to 32.5mmscf/d and 996bcpd in 1981 from the Gazelle-2 well).
The pressure tests also yielded indication of communication with the same sands south of the previously described Gazelle fault, which was tested by the IVCO 21 well at 10mmscf/d and 40bcpd also in 1981. Bottom hole gas samples were taken for use in the Development studies. These results confirm the LC2 as one of the primary Gazelle Field gas reservoirs.
Gazelle-P3ST1 also had an exploration component, to test the Condor prospect in the Lower Cenomanian LC5. This sand demonstrated good gas shows, and considerably de-risked the trap associated with the greater Condor prospect. A follow up well to fully evaluate Condor at a location where the LC-5 sand is thicker, is anticipated to form part of the next drilling campaign presently scheduled to commence in early-mid 2013.
The Upper Cenomanian sands in P3ST1 did not warrant testing. The UC1 and UC2 sands were non-reservoir facies and the UC3 although good quality was water bearing. Consequently, the Gazelle-P3ST1 well was then sidetracked (Gazelle-P3ST2) to optimise the location for development of the UC-1 oil and gas bearing reservoir. The Gazelle-P3ST2 well reached TD on 19 June 2012. This well also had an exploration component within the Albian section, to drill a feature seen on the 3D seismic. This was unsuccessful and the well was cased above the Albian.
Drill stem testing of the UC-1 reservoir was successfully completed on 17 July 2012 and demonstrated deliverability of 19.5mmscf/d and 133bcpd, which when completed with larger tubing can be expected to deliver around 33mmscf/d. In addition, a second drill stem test of the oil leg of the UC-1 reservoir recovered 40 API oil at an unstabilised rate of 760bopd before mechanical problems prevented further flow. Gazelle-P3 ST2 has now been suspended for future use.
The Gazelle-P4 well was spudded on 25 July 2012. This well was drilled to TD in only 28 days, demonstrating the high performance of the Rialto drilling team with qualified rig personnel from Transocean and appropriate maintenance carried out on the drill rig.
Gazelle-P4 was appraising Upper and Lower Cenomanian sands on the south side of the Gazelle fault. The objective was to test the oil potential of the UC2 and UC4 oil reservoirs and the gas potential of the UC3, UC5, LC1 and LC2 reservoirs collectively drilled by the three previous wells on the south side of the Gazelle fault (IVCO-12, IVCO-21 and Gazelle-1).The UC5 was very high quality, gas bearing and thicker than pre-drill estimates, consequently, the well has been suspended as a future producer in this reservoir. Well deliverability estimates for this sand are around 35-40mmscf/d.
The LC1 was an excellent reservoir sand but was penetrated water wet. This established a gas water contact which better defines the gas-in-place up-dip of this well where the future producer will be drilled. The LC2 sand was a low permeability sand and although demonstrating good gas shows, was unsuitable to deliver a high gas rate as a development well. The location for a future LC2 producer on the south side of Gazelle will be determined after further studies. The UC-3 sand penetrated the gas-water contact which will reduce the volumetric uncertainty for the reservoir. The results of the UC-2 (low permeability) and the UC-4 (water wet) will be used to reassess the oil volumes on the south side of Gazelle as part of the CPR up-date planned for late October, 2012.
The P3 ST1, P3 ST2 and P4 wells have fully appraised the Gazelle reservoirs and the data acquired will be integrated into a revised Development Plan and CPR planned by the end of October.
Gazelle Field and Greater CI-202 Development (Rialto Working Interest: 74%, Paying Interest: 84%)
Following the award of the Exploitation area in April 2012, Petroci have the option to back in to the new area by up to an additional 11% paying interest. Petroci have formally indicated that they intend to take up the full quota. Consequently, Rialto’s new Gazelle Exploitation area Working Interest (WI) will be 74% and the Paying Interest (PI) will be 84%.
There are three ongoing activities following the drilling of the Gazelle appraisal wells:
1. Front End Engineering Design (FEED) was awarded to Petrofac in August 2012 and as part of the FEED process, the well results and fluid data are being integrated into a revised development option, which will deliver a concept to meet the gas demand of 100mmscf/d and provide reduced upfront capital expenditure, whilst maintaining schedule.
2. A new Competent Persons report which will deliver reserves estimates based on the new well data.
3. Update the Field Development plan to incorporate solutions to reduce capital expenditure.
In addition to development activities at the Gazelle Field, a Field Development Plan for approval for Hippo and Bubale discoveries within Block CI-202 was submitted on 11 July 2012. If received, such approval will provide Rialto with tenure for 25 years to Hippo and Bubale’s combined gross contingent resources of 15.2mmbbls of liquids and 119bcf of gas and combined gross prospective resources of 5.4mmbbls of liquids and 231bcf of gas. Once the Development Plan is approved, and exploitation area awarded, the booking of reserves over Hippo and Bubale will be possible given the Gazelle FID has been taken. These fields can be rapidly developed as they will tie into a regional gathering system at Gazelle.
Second phase drilling programme (2013)
Rialto recently executed a contract to use the Vantage Sapphire jack-up drilling rig for a three firm (105 days) and two option well exploration and appraisal drilling programme, scheduled to commence during the first half of the 2013 calendar year. This rig is currently operating in Côte d’Ivoire, has an excellent operating record and is suitable to drill a number of the Company’s emerging exploration prospects, including those that are too deep for the GSF Monitor rig used for the Gazelle-P3 and Gazelle P-4 wells.
Following the latest 3D acquisition, the Company has a number of exciting and high impact exploration and appraisal targets that can underpin this drilling programme. Outside of the Gazelle Field, these targets total 36.2mmbbls and 130bcf of contingent resources, and 501mmbbls and 1,780bcf of prospective resources identified on the current RPS CPR. A significant up-grade to prospective resources is expected when the newly identified prospects being mapped on the block-wide 3D are incorporated. A new CPR for the prospective resources is planned for November 2012.