TLW

20.02.2007 Investors Keen To Hear Test Results From Heritage Oil Corp’s Kingfisher-1A Well Canada’s Heritage Oil Corp has gladdened the heart of investors with news that it is preparing to production test the deeper intervals of the Kingfisher-1A well in Uganda. The well, drilled to a total depth of 3,195 metres, has already successfully flowed oil, pumping over 4,000 barrels per day from an 10 metre thick interval 1,783 metres down. That was a good result, exceeding company expectations, but success in the deeper zones could put Kingfisher in a different league. The first production test was back in November. Since then the well has been sidetracked to probe the deeper primary objective. The Toronto-listed firm, which is presenting at this week’s oilbarrel.com conference in London, and its 50/50 partner Tullow Oil plan to test three intervals with a total thickness of 44 metres between 2,260 and 2,367 metres, with the thickest interval measuring 21 metres. This sounds promising and success here could put Kingfisher, which has an areal extent of around 70 sq km, in a different league. It’s not all been plain sailing, however. The well has made slow progress from November, reaching 2,962 metres in mid-January and taking another month to dig another 250 metres before stopping well short of the targeted total depth of 4,000 metres. It appears the limitations of the rig have hampered progress and obscured the potential of this well: the November production test, for example, was constrained by the rig, with Heritage estimating it could have flowed 5,600 barrels per day with the right equipment. This is frustrating for investors but not uncommon when drilling in remote and untested areas when it can be difficult - and expensive - to access resources. Investors now have to wait up to three months for the results of the test programme and to find out by just how much Kingfisher will enhance the Albertine Basin’s prospectivity. Last year Heritage’s CEO Tony Buckingham said the basin “looks increasingly like it has the elements to make it a world-class petroleum basin”. There is still a long way to go, however. Further drilling will be required to really get to grips with the resource potential here and to answer questions about the waxy nature of the crude. Tullow Oil, which last year acquired Hardman Resources for US$1.1 billion to secure 100 per cent of Block 2, home to the Waraga, Mputa and Nzizi discoveries, is keen to get the drillbit to work to find sufficient reserves to justify a pipeline to the coast. In the wake of the Nzizi-1 well - a slimhole well which encountered good oil shows over a gross interval of around 180 metres but was not tested - Tullow said it believed there was scope to significantly increase the previous recoverable volume (around 30 million barrels) in the Mputa/Waraga area. Tullow and Heritage now dominate this play, holding 50 per cent each of blocks 1 and 3A in Uganda and also taking on Blocks 1 and 2 in the east of the Democratic Republic of Congo, on the border with Uganda in the Lake Albert region. Tullow also holds 100 per cent of Block 2 in Uganda. This gives the companies a real understanding of the basin-wide geology, not to mention a material stake in what is shaping up to be a very interesting play.