HRT executives expressed wide optimism to investors on Wednesday about the source rock and oil shows found at its Wingat-1 well off Namibia. But the management of the Brazil independent still faced doubts from analysts about whether the geology – which despite oil shows had low porosity — could translate into commercially viable hydrocarbons.
“We are very, very pleased with the results we have obtained,” newly appointed chief executive Milton Franke said in a conference call.
The source rock had a “larger thickness in any basin I have seen before,” he added, with one “several hundred metres thick.” “We have two source rocks with high potential in the oil window.”
HRT has faced a difficult road over the past few weeks, with a management shakeup that replaced its chief executive and another top boss, and non-commercial results at the closely watched Namibia prospect and its latest onshore well in Brazil’s Solimoes basin.
Company shares, which had hit a record low in Sao Paulo trading this week, recovered somewhat to 2.81 reais ($1.37) as of early afternoon.
But HRT also said it would sit down with partner Rosneft through this weekend to decide the direction of future exploration efforts in Brazil’s remote onshore Solimoes basin after a recent non-commercial well. Wingat-1, drilled in about 1500 metres of water by the semisubmersible Transocean Marianas, is the first of three wildcats planned for the region. Portuguese player Galp has a 14% interest in the trio. HRT said it will press on with plans to drill at its Murombe prospect 15 kilometres from the first well in about two weeks’ time.
Analysts peppered the management with questions, however, about whether the rock found at Wingat-1 could translate into oil flows and why the company would expect to find better results elsewhere in the basin.
It was unsuccessful in the main Albian-era carbonate target, but was drilled deeper, to 5000 metres, to test a secondary turbidite target, rich in organic carbonic material and oil-soaked sandstones.
Joe Paul, VP of exploration and production at HRT America, indicated that pinpointing suitable reservoirs and porosity had a higher probability of success when source rock was identified.
“We found the hard stuff but not the easy stuff,” he said. “The chance of finding reservoir is very high.”
Tudor Pickering Holt said early on Wednesday said the signs from the initial well could lure more partners to the prospect.
“We like the risk/reward given encouragement from the Wingat well and massive upside potential from Murombe,” the investment bank said in a note.
“Moreover a further Namibia farm-out is now more likely