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Clontarf Energy and Sasanof-1: getting in on the act

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Oil and gas exploration company, Clontarf Energy’s (LON:CLON) recent acquisition of a 10% interest in the Sasanof prospect is well timed. The Sasanof prospect is owned by Western Gas, a holding company for a multi Tcf (trillion cubic feet) gas exploration project located on the Australian North West Shelf. This week’s announcement by both Western Gas and Clontarf that the Valaris MS-1 rig has arrived at the Sasanof-1 exploration well means that drilling should start any day now.

While there has been no uplift in the share price since the news – it is currently around 0.46p although it has doubled YTD – Clontarf and its investors will be hoping that it is sitting on a significant find.

Playing the waiting game but for how long

The timing is particularly crucial as the firm has in recent months been “actively reviewing a series of oil and gas proposals including undertaking preliminary due diligence on some, only to discard them,” as stated by Chairman, David Horgan. Clontarf’s other projects in Bolivia, Ghana and Chad still appear to be a long way from fruition. Clontarf Energy had in 2018, signed a Petroleum Agreement with the Ghana National Petroleum Company (GNPC), in relation to the block and this agreement but it is still waiting for ratification by the Ghanaian government.

In Bolivia, it is also in negotiations with the Ministry of Electricity Technologies and the State Lithium Company on exploration and development of the salt-lakes – samples have been analysed and process work is underway. But while Bolivia holds over 50% of the world’s economic lithium resources (in accessible evaporites), the policy of lithium extraction is still under review and Bolivia has not yet exported any battery-grade lithium.

Global demand for gas remains high despite geopolitics

Nevertheless, with the phasing out of Russian gas and with the demand for gas set to increase, safer jurisdictions such as Western Australia should see more gas exploration prospects. According to Shell (LON:SHEL), a combination of rising LNG demand and supply constraints saw the global trade in liquefied natural gas (LNG) increase 6% to 380 million tonnes during 2021.

Sasanof: chance of success?

The Sasanof Prospect could be the win Clontarf needs. Sasanof covers an area of up to 400 sq km and the Sasanof-1 well is Western Gas’ first exploration well drilled in its exploration portfolio surrounding the Equus Gas Project – a development-ready certified 2 Tcf gas and 42 MMbbl condensate resource (2C).

Sasanof is also updip and 20 km west of the Mentorc Gas and Condensate Field, which was discovered in 2010. The Mentorc discovery opened up the play within the top-sets of the top Lower Barrow Group. The field consists of multi Darcy (> 10 Darcy) and high porosity (average porosity 27%) reservoir sands that are over 100m thick and contain a 60m gas column. The field was identified by strong amplitudes on the Glencoe 3D seismic survey.

Based on Western Gas’s forecasts and analysis by ERC Equipoise, Sasanof estimates a 2U Prospective Resource of 7.2 Tcf gas and 176 Mbbl condensate (P50 recoverable), with a geological chance of success of 32%. However, Sasanof surrounds the Equus Gas Projects which has a historic exploration drilling success rate of 88%, with 15 discoveries from 17 wells.

The Sasanof Prospect is covered by several high-quality modern 3D seismic surveys. The Glencoe 3D survey is the most technically advanced and analysed data set over Sasanof. The company has also cited a study by DownUnder Geosolutions (DUG), a seismic processing company where one of the main conclusions from its QI study was that “updated lithology and fluid predictions confirm the prediction of gas in Sasanof.”

Clontarf’s 10% acquisition of Western Gas has been funded by an equity raising of £3.5m at 0.25p per placing share amounting to 61% of Clontarf’s already issued share capital.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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