Block 1711 is situated in the Namibe basin off the northern coast of Namibia along the international boundary with Angola. The two separate exploration prospects, the Kunene and Hartmann, have been identified by extensive modern seismic data on the 893,100 hectare (2.2 million acre) block. EnerGulf has a 10% working interest in the project.
The report covers the oil case and an alternate (and completely independent) gas case for the Kunene and Hartmann Prospects and gives Prospective Hydrocarbon Resource estimates in "Low" (Conservative, P90 confidence level), "Best" (Realistic, Most Likely), and "High" (optimistic, P10 confidence level) categories in each case. The Report's risk analysis provides a range of probabilities of hydrocarbon occurrence for both the Kunene and Hartmann. Additionally, NSAI conducted a scoping economic analysis of the Kunene Prospect using the "Best Estimate" for both an oil case and a gas case.
Specifically, the NSAI report provides the following: (MMBO=Millions of barrels of oil: BCF=Billions of cubic feet of gas)
Unrisked Gross (100 Percent)
Prospective Hydrocarbon Resources
OIL CASE
Oil Gas
Prospect (MMBO) (BCF)
Kunene
Low Estimate 126 123
Best Estimate 454 445
High Estimate 921 899
Hartmann
Low Estimate 863 618
Best Estimate 2,704 1,928
High Estimate 5,118 3,671
GAS CASE Kunene
Low Estimate 11 720
Best Estimate 38 2,561
High Estimate 78 5,209
Hartmann
Low Estimate 69 4,592
Best Estimate 211 14,064
High Estimate 399 26,461
RISK ANALYSIS Probability of Success:
Kunene: 10-16%
Hartmann: 7-13%
The NSAI report states "As the first well drilled in the license area will be at the Kunene prospect, a successful test there will significantly reduce the risk of the Hartmann Prospect by reducing uncertainty pertaining to reservoir, source, and seal."
KUNENE PROSPECT SCOPING ECONOMICS
The following estimates are based on an unrisked gross (100 percent) of the best estimate of the prospective hydrocarbon resources on the Kunene Prospect. The initial net prices, for the purpose of the analysis are $62.59 per barrel for the oil case (including $3.00/ bbl for transportation and processing costs) and $3.08 per MCF for the gas case (including $4.00/MCF for transportation and the various processing costs). The base product prices, facility and operating costs are escalated at 3% per year. Included in the capital costs are provisions for exploration and delineation wells to evaluate the prospect with production beginning in 2014.
KUNENE PROSPECT Unrisked Best Estimate Unrisked Best Estimate
Net Revenue After-Tax Cumulative
After Income Tax Present Worth
Discounted at 10%
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OIL CASE (US$000): $18,832,849 $5,371,504
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GAS CASE (US$000): $11,614,159 $2,737,451
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The Kunene prospect is defined by a 650-square-kilometre 3-D seismic survey. The structure forms a four-way dip closure covering 82 square kilometres, with vertical closure of over 400 metres. A test well at Kunene would be expected to be drilled to a total depth of approximately 3,625 metres in approximately 900 metres of water, at a cost of approximately US$21,200,000, including testing and completion or abandonment costs.
The Hartmann prospect has been delineated by 1,085 km of 2-D seismic. It is identified as a stratigraphic trap with an area of 377 square kilometres and approximately 1,600 metres of vertical relief. A Hartmann test well is anticipated to be drilled to a total depth of approximately 3,500 metres.
The Kunene and Hartmann Prospects reservoirs are thought to be reef or carbonate bank buildup. Analog reef type oil and gas fields around the world include the Malampaya Field (offshore Philippines), the Tengiz Field (onshore Kazakhstan) and the fields of the Golden Lane trend (onshore and offshore Mexico). (bnet)
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