Business World Ireland
The ISEQ fell this morning in line with Europe to 2,966 (down 13) as a run of positive news is overshadowed by the looming issue of Spanish and Italian Bond issues. Davy Stockbrokers this morning are looking at a smaller Oil Company which has what appears to be a nice discovery in Morocco. With Oil at $113 a barrell it is hardly surprising that small and dynamic new prospectors are entering the market and drilling in new and exciting areas of the world. One such is Circle Oil which seems to have made an interesting discovery in Morocco. The question may be however if Circle is finding oil near the top of the price cycle or are they finding oil at the commencement of a sustained rise in the price of this important commodity.? Davy Stockbrokers discusses these and other issues below :
FACTS: Circle Oil has announced (January 11th) that it has completed 2D and 3D seismic surveys in the Lalla Mimouna and Sebou permits in the Rhab Basin in Morocco and that the preliminary processing results support the presence of both predicted and new targets. Circle has a 75pc stake in the permits. ANALYSIS: The seismic will be used to expand the gas production business Circle is building up in the Rharb basin in Morocco. It recently completed a 54km, 8-inch pipeline from the Sebou permit to Kenitra. This pipeline, currently being commissioned, will hook up ten producing wells discovered in earlier drilling campaigns. The gas resource discovered so far is projected at 32.5 bcf on a P50 basis with production expected to climb to 7m cf/d in 2012. The new seismic will help to grow the resource base, especially on the Lalla Mimouna permit where un-risked resources are estimated at 62 bcf. DAVY VIEW: Circle is steadily building up a shallow gas production business in the Rharb basin and should expect substantial cash-flows to accrue in 2012 when production commenced in earnest (some small amount of production is already underway). The seismic programmes announced today and their preliminary results suggest that the business can be sustained and has potential to be built out further.
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