Top 3 oil picks for 2013
CHART - MADAGASCAR OIL
At the higher risk end of the spectrum is Madagascar oil, but an interesting heavy oil prospect for 2013. At its current 19p, its market cap is around £48 million. The company is the largest oil explorer in Madagascar with five contiguous blocks covering almost 30,000 square kilometres, including the Tsimiroro block and the Bemolanga block which are 60 per cent owned by Total and have prospective resources of between 1 billion and 6 billion barrels of oil. Of particular focus is the Tsimiroro which is a heavy oil field holding 1.7 billion barrel contingent resources, and with the potential to produce 150,000 barrels of oil a day at peak production. The company first listed in November 2010 at 95p, but quickly ran into trouble with the government about the validity of its licenses, leading to a rapid plunge in its share price. The licensing issue was resolved in April 2012, but doubts about the company and the political situation in the country remain as well as its ability to commercially extract its heavy oil resources.
Madagascar’s goal is to prove that it is possible to get the heavy crude oil in its fields out of the ground using a multi-zone steam flood, and that it can do so on a commercial scale. Continuous vertical steam flood is a technology used to pump steam into multiple oil-bearing zones via a vertical injection well, freeing up the crude which is pumped to the surface through production wells. At its half year results in September, the company announced all of the 25 planned injection and production wells on the Tsimiroro Steam Flood Pilot (SFP) had been drilled and completed with first cold oil produced. The net oil sand thickness averaged 70 meters across the pilot area, 40% greater than initially projected. The company plans to introduce steam to the reservoir to increase productivity and this “Huff and Puff” technique was on schedule for completion by the end of 2012.
January 2013
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