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MENAFN - ProactiveInvestors - Australia - 11/10/2012

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(MENAFN - ProactiveInvestors - Australia) Pancontinental Oil & Gas (ASX: PCL) and the L8 joint venture led by Apache Corporation (NYSE: APA) are carrying out detailed analysis of the results from the Mbawa-1 gas discovery well offshore Kenya.

While the country's Energy Minister Kiraitu Murungi had previously said the find was encouraging but not commercial, the company raised a ray of hope with its note that volumetric parameters and commercial aspects of the discovery had yet to be ascertained.

Studies are being carried out to determine the size of the discovery and its commercial potential as well as follow-up potential in other culminations on the Mbawa structure.

Mbawa-1 had intersected 51.8 metres of natural gas pay in three zones of Upper Cretaceous channel and turbidite sandstones. Porosities were very favourable at an average of approximately 24%.

The discovery was on a single localised structural culmination on the southern extremity of the overall Mbawa Prospect and the potential of the remainder of the structure remains to be assessed in the light of the Mbawa results.

Pancontinental added the deeper secondary Middle Cretaceous target remains to be properly tested and this as well as other prospects of this play type could still hold considerable potential in the Mbawa vicinity, elsewhere in L8, and in the region.

It also noted the gas recovered from the discovery zone is interpreted to be thermogenic and indicated that the potential for oil discoveries remained open.

The large amount of technical data gathered during Mbawa drilling is now being processed and assessed. It will be integrated into previous exploration models.

Although no firm decision to drill a second well has yet been made, the Mbawa 3D seismic survey and the more recent Nanaa 3D survey areas are currently the prime areas of consideration.

One of the main prospects under consideration is the Tai Prospects where the target sands are interpreted to be deeper than the sands at Mbawa 1 and are considered to potentially be in a separate petroleum system.

Apache holds a 50% interest in the L8 permit while Pancontinental's 15% interest is carried by Tullow Oil (LON: TLW) up to a maximum cap of US9 million " reduced by other exploration expenditure.

Tullow, which has a 15% stake in L8 can earn a further 5% by providing funding on Pancontinental's behalf to a cap of US6 million in any second well.

The remaining partner is Origin Energy (ASX: ORG) with 20%.


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