Victoria Oil & Gas (AIM: VOG) has successfully completed the drilling of the La-106 well at the Logbaba gas and condensate project in Cameroon. La-106 was drilled to a depth of 10,509 ft and in excess of 300 ft of gross pay delineated multiple gas-bearing sands.
According to VOG, multiple gas-bearing sands were encountered between 5,482 ft and 10,400 ft, which can be correlated to wells drilled in the 1950s. The company will now obtain further information from La-106 through running open-hole logs and completing a petro-physical evaluation. Well flow tests will be run after the casing is set.
"Drilling two out of two successful wells in Cameroon is a notable achievement and we expect that logging and testing of La-106 will confirm our confidence in this field and match the excellent results that La-105 achieved”, VOG chairman Kevin Foo commented.
La-105, VOG's first well in Cameroon, was completed in March 2010 and it subsequently tested at rates in excess of 55 million cubic feet of natural gas and 1,000 barrels of condensate per day - together representing approximately 10,000 barrels of oil equivalent per day - between depths of 7,005 and 8,500ft from Lower Logbaba and Upper Logbaba D sands.
VOG noted that the completion of La-106 means that the key licence and joint venture requirements have been met. Furthermore, the company has now completed all significant commitments under the exploration licence agreement, and it is in the process of submitting the necessary documentation to the Cameroon government to be awarded the 35 year exploitation licence.
“Our focus now is to build our production facilities and pipeline to deliver gas and condensate to our customers by Q4 2010", Foo added.
The company said that conceptual engineering for gas production facilities and a pipeline to industrial customers have now been completed, and that it has confirmed the feasibility of the project and its design assumptions.
Detailed engineering, budget and schedule definition is underway.
“The company is working closely with all Ministries and stakeholders in Cameroon to ensure that plant and pipeline construction meets the highest engineering and safety standards and that all permits and licences to operate are expedited”, VOG stated.
In a note to investors, London-based stockbroker Fox-Davies described the initial La-106 result as ‘excellent’ and highlighted that, whilst there is need to wait for logging results, it seems that La-106 has found a larger and better reservoir section than in any of previous wells drilled on the field.
The stockbroker noted that La-106 represents a massive success in its own right, but it also provides increased confidence in the potential of the whole licence which features an even larger passive seismic anomaly few kilometres to the North of Logbaba.
Logbaba is located in the northern Douala Basin within the eastern suburbs of Douala, the economic capital and main port of Cameroon. Previously with the release of La-105 results, the company said that the Lower Logbaba and Upper Logbaba D sands returned production rates that were sufficient to satisfy industrial demand in Douala, which has over 2 million inhabitants.
Additionally, VOG also commented on their operations in Russia, where the 2010 work programme is now underway at the West Medvezhye exploitation licence, located in the prolific Yamal-Nenetsk hydrocarbon region in Northern Siberia.
West Medvezhye is next to Gazprom’s Medvezhye field which has been in production since 1972. The oil & gas junior first acquired a controlling stake in the company that held the West Medvezhye Gas licence in 2004, before increasing its ownership to 100% in 2005.
The company noted the current work programme includes gas tomography and passive seismic spectroscopy surveys over a large part of the block, and a 62km winter road has been built.
Last month, VOG announced raising £14m through an equity placing, issuing 430.7m new ordinary shares at a price of 3.25p per share to institutional and private investors. The proceeds are being used, primarily, at Logbaba and is also funding the work programme in Russia.