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Tuesday, 6 November 2012
Simba Energy entering ‘new and exciting’ phase, says broker
Simba Energy (CVE:SMB) has moved into a new and exciting phase in its development, according to City boutique Old ParkLane Capital.
Following the completion of a passive seismic survey Simba is now advancing towards its first drill programme in Kenya - though 2,000 kilometres of 2D seismic will be shot first.
It revealed yesterday that the recently complete survey confirmed seven leads in Block 2A and confirmed good potential for hydrocarbons.
In a note today OPL analyst Barney Gray pointed to the potential for the Kenyan asset to drive a re-rating for the Toronto listed shares.
“Excitement over the exploration potential of onshore Kenya continues to accelerate particularly since Tullow Oil announced a successful result with the Twiga South-1 well on Block 13T at the end of October,” Gray said.
"With the completion of this latest phase of work on Block 2A, Simba has moved into a new and exciting phase of the company’s development and we believe that the commencement of a maiden exploration well will enable the shares to be re-rated.”
The passive survey initially assessed three existing target areas and it also discovered four new leads for further exploration.
Chief technical officer James Dick said that Simba now has sufficient information to be comfortable that a small 2D survey will be able to upgrade the main target areas and easily support a decision to drill.
"Here on Block 2A, in a manner complemented by our existing 2D data, the passive seismic survey has discovered four more potential leads for follow up at our primary and secondary leads (P1 & P2) and confirmed good potential for hydrocarbons,” Dick said.
The first target, tagged as ‘P1’, was confirmed by the survey as having two distinct areas. Of these two areas one demonstrates the highest level of hydrocarbon seismic energy interpreted amongst all seven potential leads in the survey.
This has an area of 29 square kilometres.
The other area within the P1 target spans more than 100 square kilometres has a good response for hydrocarbon potential, Simba said.
Meanwhile it said that, in the ‘P2’ area, several had several interconnected leads with good hydrocarbon responses. And in the third area, ‘P3’, the responses fit ‘exceptionally well’ with present 2D coverage.
Simba expects the follow up 2D seismic will begin in the early part of next year, and planning work is now underway.
It plans to carry out a minimum of 200 kilometres of 2d seismic in this programme.
This will help finalise the location and depth of the first exploration well – which will be in the ‘P1’ area.