An encouraging result in the now deepened Ntorya-1 well has prompted a fight back in Aminex (LON:AEX) and Solo Oil (LON:SOLO) shares.
This morning the exploration partners revealed that they have encountered strong gas shows in a good quality reservoir sand. It occurred at a depth of 2,660 metres after the partners made a decision to deepen the well.
Aminex shares gained 30 per cent today and Solo was up nearly 20 per cent.
Initially the Ntorya-1 well failed to find its targeted reservoir targets, which had been estimated at depths between 1,800 and 1,900 metres. But the well did find some traces of gas in the lower part of the well.
This initial disappointment dealt a blow to both stocks. After the news, released on February 7, Aminex shed over 40 per cent. dropping to a low of 2.88p from 5p, while Solo lost 27 per cent to trade at 0.51p.
Subsequently the well was analysed further and the partners identified a new, deeper target.
Last week it was decided that Aminex and Solo would continue drilling, extending the well to a depth of 2,750 metres from 2,500 metres. Today’s news of strong gas shows and good quality reservoir sands is an encouraging sign.
A logging programme will now take place to evaluate the newly drilled, deeper, section of the well.
“Although Ntorya-1 has yet to be logged, today’s results represent a great upside surprise, to our minds, and we look forward to logging results and news of next steps for this well,” Shore Capital analyst Craig Howie said.
Ntorya-1 is located within the Ruvuma Basin onshore in Tanzania. Aminex is the operator of the project and it has a 56.25 per cent in the asset, while Solo Oil owns an 18.75 per cent interest.
Tullow Oil is also a partner with a 25 per cent stake. However it decided not to participate in the well deepening exercise.
As a result, Aminex has a 75 per cent stake in the deeper section and Solo has the remaining 25 per cent.
Ntorya 1 was drilled in an onshore location in eastern Tanzania. It was drilled to test an area within the Ruvuma basin, which is also host to several large gas discoveries offshore in deep waters.
The Ruvuma Basin has become extremely active for the oil and gas industry in recent years.
Anadarko (NYSE:APC) of the US with partner Cove Energy (LON:COV) have drilled several successful deep water gas wells offshore in the Mozambique sector of the basin.
BG (LON:BG.) and partner Ophir Energy (LON:OPHR) also made an offshore gas discovery in the Tanzanian sector last year.
At 10:00, Aminex shares were up 0.86p, or 28 per cent, trading at 3.89p each and Solo had gained 0.1p, or 16 per cent, at 0.68p.