PETALING JAYA: Investors cheered news of Masirah Oil Ltd, an associate company of Hibiscus Petroleum Bhd, finding evidence of hydrocarbon in the drilling of a well in an offshore oil block in Oman by snapping up shares of the latter, pushing its price to a high of RM2.33.
The mother share later pared gains to close eight sen higher to RM2.18 on heavy volume of 4.18 million shares. The warrants performed better, ending 15 sen higher to RM1.68, with 10.3 million units changing hands.
Masirah Oil is 64% and 36% owned by Lime Petroleum Plc and Petroci Holding, respectively.
Petroci is Ivory Coast’s national oil company. Hibiscus, meanwhile, has a 35% interest in Lime, and Rex International Holding Ltd the remaining 65%.
This is the second exploration well to be drilled by Masirah Oil under a two-well drilling programme in the Block 50 concession area east of Oman.
Masirah Oil had to suspend drilling activities in the first well in December last year without reaching the target depth for safety reasons.
In an announcement to the stock exchange yesterday, junior exploration and production firm Hibiscus said it had drilled to a final depth of 3,000m into the Cambrian formation for the second well, where hydrocarbons were discovered in several formations, and good oil samples extracted.
“The well will undergo data acquisition before setting the completion for testing,” it said.
Chief financial officer Joyce Vasudevan said specific details on the commercial value of the oil would be known only after the testing phase of the well.
“The key point to note is that with the information that has already been acquired whilst drilling, there is good justification to complete and test the well. Completing and testing a well is a relatively expensive process.
“In the first well that we drilled in Oman in December last year, there was no commercial justification to test the well and we disclosed as such. In the case of our second well, there is clear justification to complete and test the well and we are proceeding to do so,” she said in response to questions from StarBiz.
Masirah Oil chairman Hans Lidgren said the discovery of hydrocarbons in the second exploration well was a significant step towards the deepening of their knowledge and understanding of the offshore geology in the east of Oman, where no discovery has been made before.
“The results from the second well were vital for the future development of this block. This discovery confirms the high quality and value of the Oman asset," he said.
The testing of the hydrocarbon samples is expected to take a few weeks before the results can be determined.
The well was drilled using the Aban VII drilling rig and Rex Virtual Drilling technology, which enables the identification of liquids such as oil, condensate gas and water in the ground from analysis of seismic data.
This approach differs from the industry practice of looking for geological structures from seismic data analysis and then making probability estimates of finding oil, Singapore-listed Rex said.
Based on its ability to directly locate hydrocarbons, Rex Virtual Drilling contends that it can achieve a success rate of more than 50% in exploratory drilling, compared with the global industry average success rate of 10%-15%.
The Block 50 Oman concession is estimated to have risked resources of some 390 million barrels of oil, according to a 2011 study by independent consultant Aker Geo AS of Norway.
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