Tuesday, September 26

BIG PICTURE – Tangiers shares on the march as market tunes into company-making potential of Morocco

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Proactive Investors
By Ian Lyall

Operator Galp is chasing three stacked targets: Assaka in the Upper Jurassic; the main target Trident in the Middle Jurassic and will move on to TMA if the well is deemed a success.

Operator Galp is chasing three stacked targets: Assaka in the Upper Jurassic; the main target Trident in the Middle Jurassic and will move on to TMA if the well is deemed a success.

Investors in Tangiers Petroleum(LON:TPET, ASX:TPT) will know soon if the Tarfaya block off the coast of Morocco holds the huge, company-making promise suggested by the pre-drill data.
For the AIM and ASX-listed oil explorer has confirmed work will get underway on its first well in mid to late June.
This follows the mobilisation of the Ralph Coffman jack-up rig (pictured), which will target a “best estimate” 758mln barrels of the black stuff.
With 25% of the block, this represents an unrisked prospective resource net to Tangiers of 190mln barrels.
So TAO-1 fits the very definition of a company-maker, particularly when you consider the group has a market capitalisation of just £21mln.
It is operated by Portugal’s Galp Energia, which has 50%, with the remaining stake is owned by ONHYM, the state-controlled oil company.
Tangiers managing director Dave Wall described TAO-1 as a “highly attractive prospect for Tangiers’ shareholders”.
“It is a very large structure located in shallow water within a proven play fairway and adjacent to an existing oil discovery,” he said.
“All the ingredients required for exploration success are present in the region, giving Tangiers, and its shareholders, a good chance of success at TAO-1.”
Galp is chasing three stacked targets: Assaka in the Upper Jurassic; the main target Trident in the Middle Jurassic and will move on to TMA if the well is deemed a success.
The shares, up a third in the past week, advanced another 10% 13.2p each in morning trade.
Galp is expected to have drilled Assaka by mid-July and Trident by late August, according to director Steve Staley, who knows all about frontier exploration following his time with Cove Energy.
“As is common in these offshore wells, there is no major testing,” he told Proactive Investors.
“With modern technology there is a lot of logging that is going to tell you a lot.”
A 110-metre oil column was discovered on the nearby Cap Juby licence being developed by Cairn Energy and Genel.
However the crude was of the heavy variety, which is more difficult to extract and transport.
“This is encouraging, but we think we are in a better position to find light oil,” said Staley comparing Tarfaya with the Cap Juby discovery.
“There are two questions. The first is heavy oil versus light oil, the other is reservoir quality and we have addressed these pre-drill.”
Much of this work has focused on the primary Trident target as a thorough analysis of the 3D and 2D seismic data, as well as close inspection of the geology beneath the Atlantic Ocean, identified the drill site for TAO-1.
“We have done much to reduce the risk of finding a bad quality reservoir,” said Staley.
“We are carrying a 21% chance of success number. But that figure predates a lot of [seismic interpretation]work.
“Tangiers did a competent persons report before the 3D was shot and interpreted. “Galp has looked at the chance of success and is running with a substantially higher chance of success.”

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