Interim Management Statement

RNS Number : 9926B

Soco International PLC

05 November 2009

 



SOCO International plc

("SOCO" or the "Company")

INTERIM MANAGEMENT STATEMENT

SOCO presents its Interim Management Statement for the period from 1 July 2009 to 4 November 2009. 

OVERVIEW

• Launched high impact exploration and appraisal drilling programme across West and Central Africa and South East Asia  

  • Successful drill stem test of first appraisal well offshore the Republic of Congo (Brazzaville)

• Received Vietnamese Governmental Approval of Te Giac Trang Field Development with first oil on track for mid-2011

  • Preparations under way for TGD drilling with TGD-2X planned in Q1/Q2 2010

• Early interpretation of seismic reprocessing on Block 16-1 offshore Vietnam reinforces mapping on Te Giac Den and suggests upside on Te Giac Trang

• Production net to the Company's working interest averaged 6,792 barrels of oil equivalent per day ("BOEPD") over the first nine months of the year

• Balance sheet remains strong with a cash and liquid investment balance of over $310 million 

OPERATIONS

In August, SOCO commenced the most active drilling campaign in the history of the Company. The programme includes two exploration wells on the Marine XI Block and an exploration well on the Marine XIV Block, both in the Congo Basin offshore the Republic of Congo (Brazzaville), two exploration wells on the Nganzi Block onshore the Democratic Republic of Congo (Kinshasa) and a 12 month drilling campaign in the Cuu Long Basin offshore Vietnam starting in the first half of 2010.  

SOUTH EAST ASIA

VIETNAM  

The Company's Block 9-2 and Block 16-1 interests in Vietnam are in the Cuu Long Basin, which is a shallow water, near shore, oil rich basin defined by several high profile producing oil fields, the largest being the Bach Ho field, which lies adjacent to both blocks.  Bach Ho has produced more than one billion barrels of oil to date.  

Block 16-1 

Reprocessing of the 3D seismic grid over the fairway that includes both Te Giac Trang ("TGT") and Te Giac Den ("TGD") has been completed since the half year report. Initial interpretation is encouraging for both projects. Whereas the initial wells on TGT were drilled based on time migrated seismic, the reprocessing was done on the basis of depth migrated seismic.  

Initial interpretation of the improved TGT pre-stack depth migration data set suggests that the structural crests of the TGT fault blocks are further east than originally mapped. Thus, the seven exploration/appraisal wells drilled to date in the field, with an average oil and gas flow of approximately 11,300 BOEPD per well, provide greater structural control and suggests improved results in development wells drilled up-dip of the existing wells.  

Given the imminent development of TGT, interpretation of the reprocessed seismic over TGD is not as far advanced. However, early conclusions appear to reinforce the previous interpretation of the lacustrine nature of the reservoir deposition and confirm the general location of the appraisal well, which is planned for the first half of 2010.  

Te Giac Trang

In September, the Company was informed that the Ministry of Industry and Trade, on behalf of the Vietnamese Government, had approved the Development Plan for the TGT field. The national oil company, Petrovietnam, approved the TGT Field Development Area earlier in May and subsequently assumed funding of its 41% share of development costs as of 1 July 2009.

First oil is targeted for mid-2011 and tenders for a number of long lead items have been issued. Final negotiations are under way with a Bumi Armada - Vietsovpetro consortium to conclude the contract on the floating, production, storage and offloading vessel.

Te Giac Den

The TGD Appraisal Area encompasses an area of 150 square kilometres including the high pressure, high temperature ("HPHT") discovery well, TGD-1X-ST1, on Prospect E and the analogous E South Prospect. This area borders the southern boundary of the TGT field.  

A pore pressure study over TGD has confirmed that pressures in the shallower of the two reservoirs penetrated in the discovery well, whilst sufficient to maintain porosity and permeability, are not as high as those originally anticipated. The pressure environment in this supra-volcanic reservoir is considerably less than that encountered below the volcanics. Therefore, the TGD appraisal well can be drilled in a more controlled and cost efficient manner than the discovery well. Preparations are underway to tender for a two rig programme first for a drilling campaign with one rig devoted to the CNV field and TGT development wells and a second rig for drilling the TGD-2X, an appraisal well which will only test the upper reservoir. Drilling is anticipated to commence in the first/second quarter of 2010 following the end of the winter monsoon season in Vietnam.  

Block 9-2 

Ca Ngu Vang 

With the drilling and suspension of the CNV-6P development well, the initial phase of the development drilling programme of this field, which was brought on production in July 2008, has been concluded. Since the efficient exploitation of this Basement field requires early water flooding to reach a plateau production and avoid gas breakthrough, the original development concept was to water flood the eastern flank of the structure. Because the fracturing in the eastern flank of the field of the Basement reservoir is not as intense as that indicated by wells drilled in other parts of the structure, a drilling programme is being finalised to drill a well to the western part of the field to be converted to a water injector and to sidetrack a current producer to increase production. In the interim, production has been scaled back pending the initiation of water injection in order to maintain adequate reservoir pressure.  

Production net to the Group's working interest has averaged 3,010 BOEPD for the first nine months of 2009.  

THAILAND

Bualuang field

SOCO Exploration (Thailand) Co. Ltd. holds a 40% interest in the Bualuang oilfield located offshore in the Gulf of Thailand.  Production net to the Group's working interest averaged 3,782 BOPD for the first nine months of 2009.  A seismic programme is planned to commence before year end. Additional development drilling is anticipated in the upcoming year to maintain production levels and to efficiently exploit the field.  

  AFRICA

REPUBLIC OF CONGO (BRAZZAVILLE) 

SOCO Exploration and Production Congo SA (SOCO EPC) holds an interest in and is the designated operator of the Marine XI and Marine XIV Blocks, located in the Congo Basin, offshore the Republic of Congo (Brazzaville).  

Marine XI

SOCO's first well on Marine XI was the Liyeke Marine 1 well, a low cost wild cat well which was spudded on 22 August 2009 by the Pride Cabinda jack up rig. The Liyeke Marine well, the first in a two well drilling programme on Marine XI, targeted and encountered the Sendji (post salt) formation on the previously designated S1 prospect. On reaching target depth, the reservoir was found to be water saturated. A 62 metre heavy oil column was encountered in the overlying sediments, but log and sample data indicated that the oil would not flow. Accordingly, the well was plugged and abandoned after reaching a total depth of 1,140 metres.  

The result of this well has no bearing on the post-salt prospects to the south and west of the Liyeke Marine well where the salt is thinner and discontinuous and will not prevent migration from the pre-salt source rocks. More importantly, the well has no impact on pre-salt prospects where source rocks are adjacent to the prospective reservoirs.

The Pride Cabinda is currently on location testing the Viodo 4 appraisal well ("VIM-4") which spudded on 17 September 2009. The initial drill stem test (DST) on the VIM-4 well was successful and preparations are underway to conduct a second DST in a shallower section of the reservoir. A subsequent announcement will be made in the next week to 10 days giving details of both DSTs once testing is concluded.  

The VIM-4 well is an appraisal of the 1986 Viodo oil discovery and is targeting an extension of the core area of the field drilled by the VIM-1 discovery well.  The Viodo discovery lies in some 65 metres of water and contains oil in the Toca formation, a lacustrine carbonate developed below the regional salt horizon.  Three of the four existing wells, drilled in the period 1986 to 1990, successfully tested oil, but also showed the accumulation to be geologically complex. The VIM-4 appraisal well is designed to add to the technical understanding of the discovery via a comprehensive data collection and well testing programme. 

Marine XIV

In March, SOCO EPC received Governmental approval for its farm-in to the Marine XIV Block. Since that time, SOCO EPC, as operator, has completed a 100 square kilometre multi-azimuthal 3D seismic programme.  The seismic is currently being processed and SOCO's first well on Marine XIV is planned for 2010.

DEMOCRATIC REPUBLIC OF CONGO (KINSHASA) 

Nganzi Block

SOCO Exploration and Production DRC Sprl, the designated operator with an 85% working interest in the 800 square kilometre Nganzi Block, onshore the Democratic Republic of Congo (Kinshasa), completed a 360 kilometre 2D seismic survey late last year over the coastal Nganzi Block. Initial interpretation of the processed seismic has been very encouraging as several large structures have been identified. Interpretation will continue and drilling is planned for the second half of 2010 with at least two exploration wells.

Block 5

The Group's applications for licences elsewhere in the country are pending a Presidential Decree on Block 5 in the Albertine Graben and the finalisation of a production sharing agreement on a large interior block.

ANGOLA 

Cabinda North

SOCO Cabinda Limited holds a 17% participating interest in the Production Sharing Agreement for the Cabinda Onshore North Block. The same contractor that conducted the seismic programme on the Nganzi Block has been mobilised to acquire both 2D and 3D seismic in Cabinda North.  Acquisition of the 2D seismic is currently underway.  

CORPORATE

In August, the Company announced the appointment of Dr. Mike Watts as a Non-Executive Director. Dr. Watt's industry experience as an explorationist brings a great complementary skill set to existing board competencies. Dr Watts will also serve on the Audit and Nominations Committees.

OUTLOOK

The Company is pleased to have recommenced exploratory drilling. Although the front end of the drilling programme has been focused on the lower impact projects offshore the Republic of Congo (Brazzaville), the exploration programme accelerates as soon as weather windows open offshore Vietnam following the winter monsoon season and in West and Central Africa following the rainy season. Multiple projects in both regions offer upside potential equal or greater to that accessed by the Company in previous drilling programmes.

5 November 2009

ENQUIRIES:

SOCO International plc
Roger Cagle, Deputy Chief Executive and Chief Financial Officer 

Tel: [phone]

Pelham Public Relations

James Henderson 

Mark Antelme 

Tel: [phone]

NOTES TO EDITORS:

SOCO is an international oil and gas exploration and production company, headquartered in London, traded on the London Stock Exchange and a constituent of the FTSE 250 Index. The Company has interests in Vietnam, Thailand, the Republic of Congo (Brazzaville), the Democratic Republic of Congo (Kinshasa) and Angola.

 

END

 

 

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