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Will Angola oil strike sustain the Corcel share price?

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AIM-listed Corcel [LON:CRCL] was getting plenty of love last week as it updated the market on drilling results for its Tobias-13 onshore well in Angola. Corcel stock started last week at 0.42p in London but were trading up at 0.58 Friday lunchtime.

Corcel is an Angolan focused oil and gas company, with a range of appraisal and exploration interests in the region. Corcel’s primary assets are located in the Kwanza Basin, which is currently being reactivated after several decades of underinvestment. 

Corcel interest in Angola’s reformed oil and gas sector

The company has a 20% working interest in the KON-11 block in Angola, which is operated by Sonangol, one of the biggest hydrocarbon operators in Angola.

Angola is consistently ranked as one of Africa’s top-four oil-producing countries, alongside Libya, Nigeria and Algeria. Following his election in 2017, Angola’s President João Lourenço has moved quickly to enact regulatory and structural reforms in the oil and gas sector which could benefit the sector in the long run.

Besides the amendment to the Petroleum Activities Law, government reforms included the creation of a new oil & gas regulator, namely the National Agency for Oil, Gas and Biofuels.


ANPG’s creation ended state-owned Sonangol’s multiple roles as regulator, concessionaire and operator in the country’s oil sector.

Further reforms include a decree under Angola’s privatization regulations that provides for the privatization of Sonangol. As part of the country’s four-year privatization program, Angola is planning to divest a 30% stake in Sonangol within the next five years.

“Sonangol’s divestment of non-core companies and assets to focus on oil and to attract foreign investors will likely also increase investor and operator confidence, as will enhancements in governance and transparency generally in the Angolan oil & gas industry,” said Mukhund Dhar, a partner with White & Case, a law firm specialising in the international oil and gas sector.

Highly encouraging initial results for Tobias-13 well

“The initial results of the TO-13 well are an important moment for Corcel and highly encouraging, having successfully demonstrated hydrocarbons across multiple potentially productive zones and multiple intervals,” said Antoine Karam, executive chairman of Corcel.

Karam said TO-13 looks to be the cornerstone development of a future EPS and provides Corcel with line of sight to near-term revenue generation. The testing programme should give Corcel invaluable data on how best to deliver on that goal.

The drilling results for the TO-13 well were positive, with oil shows found throughout the Binga reservoir in alignment with the distribution seen in historic production wells in the Tobias field, confirming the ability to reactivate production in the field. Based on these results, the consortium is proceeding to drill a second well Tobias-14 (TO-14), with a rig move currently underway.

Sonangol have advised Corcel that the Tobias-13 well has penetrated the entire Binga reservoir section, with potential productive zones seen in multiple intervals. The well concluded with a total depth of 958.5m, and was drilled in a downdip location from historic production wells, indicating scope for significant remaining hydrocarbon production potential.

KON-11 is considered a brownfield development and includes the historically producing Tobias field, drilled, and developed by Petrofina in the 1960s and 1970s, and inactive since the late 1990s.

The Tobias field constituted 12 historic vertical wells, and Corcel and Sonangol both believe that revised interpretation of the existing structures along with the application of modern drilling and completion technology – including potentially horizontal drilling – will lead to a higher Original Oil in Place (OOIP) figure in the reactivated field being achieved.

Corcel also retains several additional mining interests, including exposure to nickel, cobalt, rare earth elements and lithium. 

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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