LOI-V strong closed $0.40 up 7.5 cents vol. 246,286 shares changed hands.
May 15, '14 - NR
Longreach Oil and Gas Ltd. has encountered two prospective natural gas zones with its Kamar-1 well on the Kechoula structure, located in the Sidi Moktar licence in the Essaouira basin of Morocco. One zone was in the targeted Lower Liassic formation and the other in the Lower Dogger/Upper Liassic formations."These are very promising exploration results from our second Moroccan well, which adds vital, new technical evidence to our growing understanding of the large resource potential in the Kechoula structure. Most importantly, our Kamar-1 well did not encounter any bottom water, which is excellent news for Longreach shareholders and our Moroccan partners," said Dennis Sharp, Longreach's executive chairman.
The Kamar-1 well was drilled to a final total depth of 2,790 metres and intersected two distinct gas-bearing intervals. One is in the targeted Lower Liassic natural gas zone and has a gross interval of 110 metres as defined by petrophysical, wireline logs. The other is defined by the presence of significant natural gas volumes in the drilling mud within the Lower Dogger/Upper Liassic zone, which occurs over a gross interval of approximately 100 metres.
"The absence of water in the Lower Liassic formation at the Kamar-1 location adds credence to our previous hypothesis that the incursion of abnormally high-pressured salt water in the Koba-1 well is localized and not an indication of water present in the bottom of the Lower Liassic formation throughout the Kechoula structure," Mr. Sharp said.
Kamar-1 was drilled following a disciplined path that capitalized on the lessons learned in Koba-1, which was drilled in late 2013 at a location four kilometres to the northwest. Kamar-1 intersected the Lower Liassic at a depth of 2,132 metres, where, after penetrating about 30 metres, drilling was halted in order to obtain intermediate logs. These logs were interpreted and a number of gas-bearing intervals were selected to test for flow rates, pressures and composition. However, the wireline-conveyed testing equipment was unable to obtain conclusive data about potential flow rates. Once completed, drilling resumed until the total depth of 2,790 metres was achieved and then a final suite of petrophysical logs, acoustic check-shot data and selected side wall cores were obtained.
These data are currently being processed, reviewed, analyzed and integrated with the Koba-1 results for the purpose of designing an extensive formation testing program over the gas-bearing intervals encountered at both the Koba and Kamar wells. Contingent on the results of this testing program, a follow-up 3-D seismic program aimed at better identifying potential appraisal drilling locations is planned.
Delineating and defining a hybrid natural gas reservoir
Longreach's exploration mapping, drilling, logging and core samples data are continuing to define the Kechoula gas-charged structure as geologically complex. Rock sample analyses to date show an internal geological character containing sedimentary beds that are porous and permeable, representing traditional conventional reservoirs, interbedded with tighter sandstones, or unconventional reservoirs that typically span extensive areas and have the potential to yield long productive lives.
Longreach believes it has encountered a hybrid reservoir that holds substantial resource potential. Unlocking this potential requires a comprehensive technical approach, employing both conventional and unconventional reservoir completion techniques of the type that have underpinned North America's recent oil and gas production revolution.
Reservoir evaluation continues alongside plans to secure financing for future operations
Evaluating Longreach's first two exploration wells and the Kechoula structure represents the initial work in the company's four-step process to creating sustainable, economic value from prospective reservoirs. The Longreach approach to value creation is founded in: 1) understanding the reservoir; 2) designing a recovery method that maximizes value; 3) implementing cost-effective development; and 4) generating sustainable netbacks using sustainable practices. The company's Moroccan value creation work is at the early stages of this well-established and well-recognized methodology -- a disciplined process that has seen the company's Canadian technical team generate repeated economic success in a series of companies across the Western Canada sedimentary basin over the past 30 years. The company's next steps in Morocco are expected to include continued evaluation of exploration results to date, which will help define future fieldwork and program plans. Longreach is also planning to conduct financial planning to source the capital required to finance continued work to fully understand the Kechoula structure -- essential work that will help set the foundation for potential natural gas production for Longreach and its Moroccan partners at Kechoula and other prospects within the Sidi Moktar acreage. |
