Africa Oil temporarily suspends Paipai-1 well for future evaluation

Fri 11:09 am by Carrie White

Africa Oil Corp. temporarily suspends its Paipai-1 exploration well in Kenya for ongoing evaluation.

Shares of Africa Oil Corp. (CVE:AOI) slid Friday, after it announced that it is temporarily suspending its Paipai-1 exploration well in Kenya for ongoing evaluation.

The company’s shares fell 3.91 per cent as at about 11:15 a.m. EDT, trading at $6.88.

Attempts to sample reservoir fluids were unsuccessful and the hydrocarbons encountered while drilling Paipai-1 were not recovered to surface, noted Africa Oil, adding that testing of the well was not possible due to the unavailability in country of testing equipment capable of handling the higher reservoir pressures.

“We are very encouraged by the results of the Paipai well which appears to demonstrate a working petroleum system and indicates that the Anza Basin has the makings of a viable Cretaceous hydrocarbon play,” said president and COE Keith Hill.

"This result has positive implications not only for our Block 10A acreage, but also in Block 9 where we are preparing to drill a similar, albeit shallower, prospect with our partner Marathon (NYSE:MRO).

“If this result is confirmed by testing, it would be a strong addition to our already proven Tertiary rift play to the west."

The Paipai well, located in the Marsabit County of Kenya Block 10A, was drilled to a total depth of 4,255 metres and successfully logged, Africa Oil said, adding that the well was drilled to evaluate a large structural closure of Cretaceous age in the Anza Basin.

The company noted that light hydrocarbon shows were encountered while drilling a thick gross sandstone interval, which is overlain by a 200-metre thick Cretaceous source rock that yielded oil and gas shows throughout the section.

After suspension operations have been concluded at Paipai, the rig will move to the South Lokichar Basin in Block 10BB and drill the Etuko prospect in the undrilled basin flank play.

Africa Oil said the move is expected to take three months.

Tullow Oil Plc (LON:TLW) has a 50-per-cent operated interest in the Paipai-1 well, with Africa Oil holding 30 per cent and Afren Plc (LON:AFR) holding the remaining 20 per cent.