EEL, Our Neighbor In Block 2, Sees 2008 Drilling And EEZ Oil

An insightful investor found some new EEL data and argumentation on ADVFN for the quality of our JDZ investment in Block 2 and posted a link to Investor's Hub. But the site requires login and payment, and since I use ADVFN for my own trading I thought I should share it with you.

The link, if you want to sign up for ADVFN's excellent and very low-cost services, is:

http://fr.advfn.com/cmn/fbb/thread.php3?id=11285167&from=36131.


Read on:

(2) Joint Development Zone (JDZ) Block 2. 8.75% WI. Operator Sinopec

The JDZ is the boundary between Sao Tome and Principe and Nigeria, divided into Blocks. An EEL/ONGC JV was awarded 15% of Block 2 (EEL effective interest 6%). EEL subseuqently increased their stake to 9% but 0.25% was aside for a "partner". Total cost to EEL was US$9.05M and is fully paid. 3D seismic is already available for the block. Gross prospective recoverable resources are stated in the NSAI report (Click here) to be 1,349 mmbbls oil and 1.9 Tcf gas from 4 prospects (unrisked). Unrisked resources net to EEL are 121 mmbbls oil and 168 bcf gas (based on 9% share). A rig has been contracted to drill a well in 2009, with US$3M set aside as their share of costs (max rig cost is US$410K/day, or $37K/day net). The Obo-1 well recently drilled in JDZ Block 1 encountered hydrocarbons.

(4) Sao Tome Exclusive Economic Zone (STP EEZ)

EEL have the right to acquire 100% interest in 2 blocks of its choice in Sao Tome EEZ, plus they can take 15% of government interest in any further Blocks in the EEZ. Note that US group ERHC have a similar option, but EEL have first rights. Initial cost of the 2 EEZ blocks will be US$2M and US$2.5M licence fees. Further "signature bonuses" are payable upon commercial discoveries and production, with aggregate not to exceed US$77M for each Block. PGS/EEL acquired and interpreted ~13,000km 2D seismic data. They will use this to select their 2 blocks (possibly early 2008), then perform 3D seismic. There is various evidence for significant hydrocarbons in the STP EEZ - latest PGS flier.