Chevron Press Release Says Company Discovered Hyrdrocarbons On Obo-1

In a press release just faxed to us from Sao Tome and not yet available on Dow Jones, Chevron says it's hit oil on Block 1 but it won't say how much - except that it's "at least" 150 feet of net pay in multiple reservoirs - or even if it's a commercial discovery.

Here is the press release sent to us from the Gabinete Petroleo (Petroleum Office) of Sao Tome and Principe minutes ago:

Chevron
Press Release

Obo-1 Well Encounters Hydrocarbons in Nigeria/Sao Tome & Principe Development Zone's Block 1

May 26, 2006: The Nigeria - Sao Tome and Principe Joint Development Authority, Chevron and its co-venturers Esso Exploration and Production Nigeria-Sao Tome (One) Limited, and Dangote Energy Equity Resources, have encountered hydrocarbons in the Obo-1 exploration well in Block 1 of the Nigeria - Sao Tome and Principe Joint Development Zone.

The Obo-1 well logged a cumulative total of at least 150 feet (45 meteres) of net hydrocarbon pay in multiple reservoirs and provided important reservoir rock and liquid samples, which need to be avaluated and integrated into the interpretation of the Obo Area to determine the next step of the apprioasal process. At this stage, it is premature to determine whether or not Chevron and its co-venturers have made a commercial discovery.

The Obo-1 well us located in 1,720 meters of water (5,640 feet) and the drilling operation was completed in 63 days on March 15th, 2006.

The JDZ Block-1 is located approximately 190 miles (300 kilometers) north of the city of Sao Tome and approximately 125 miles (200 kilometers) south of the city of Port Harcourt in Nigeria. Chevron JDZ Limited has a 51 percent equity share in the block while Esso Exploration and Production Nigeria-Sao Tome (One) Limited, and Dangote Energy Equity Resources have the remaining 40 and 9 percent equity, respectively.

General Manager, Government & Public Affairs

Here is Reuters' coverage of the discovery:

REUTERS UPDATE 1-Hydrocarbon found in Nigeria/Sao Tome well-Chevron [GBWLSCR]

(Updates with quote and background)

LAGOS, May 26 (Reuters) - The first well to be drilled in the offshore area shared by Nigeria and Sao Tome has found hydrocarbons, but it is premature to say if the discovery is commercial, U.S. energy giant Chevron said on Friday.

The Obo-1 well found a cumulative total of at least 150 feet (45 m) of net hydrocarbons in multiple reservoirs which must now be evaluated to determine the next stage of the appraisal process, the company said in a statement.

"It is premature to determine whether or not the Chevron and its co-venturers have made a commercial discovery," the statement said.

Chevron holds 51 percent of the contract in block 1 in the Nigeria/Sao Tome Joint Development Zone, while ExxonMobil has 40 percent and a local partner Dangote Energy Equity Resources has the rest.

The results of this well have been eagerly awaited because it is the first to be drilled in the deep water area which is thought to contain billions of barrels of oil. Any commercial discovery in the area will be momentous for Sao Tome and Principe, a tiny impoverished island nation in the Gulf of Guinea which lives mostly from fishing.

Chevron did not say whether the hydrocarbons it found were oil or gas.