By Amy MCellan
Exciting times ahead for backers of ASX-listed Pura Vida Energy, which will be appearing at Oilbarrel conference in London on Thursday. The Perth-based explorer is taking a run at the Atlantic waters offshore Morocco, where sentiment has soured after fellow operators suffered a number of dud wells last year.
Pura Vida, however, sees plenty of potential on its acreage, where its neighbours include Chevron, Kosmos and BP. The MZ-1 wildcat is now due to spud next month with the arrival of the Atwood Achiever drillship, in what could be a transformational well for the ASX company.
This well will probe the Ouanoukrim prospect, rather than the previously flagged Toubkal prospect, and will be targeting total gross unrisked mean prospective resources of over 1.4 billion barrels, with a high case of over 3 billion barrels. It will drill to a depth of 5,600m with the potential to deepen the hole to 6,150 metres to penetrate a fifth objective in the Lower Jurassic.
This change in well location was driven by a desire to drill the basin’s entire prospective stratigraphic section and test multiple independent play types with the first well, providing a better overall chance of success; the Toubkal prospect, by contrast, was a single, shallow target in the Mid-Miocene at a depth of 1,000 metres.
What’s more, MZ-1 is expected to drill through the same Mid-Miocene channel sands targeted at Toubkal, albeit out of closure, yielding valuable data that will be used to calibrate the 3D seismic and help get a better insight into the Toubkal structure, which could be a candidate for the second well.
Analysts at Mirabaud Securities said this was “a logical approach in a frontier exploration province such as this”.
Perhaps even more astute are the terms of the Australian company’s farm-out with partner Freeport McMoRan, the NYSE-listed natural resources group. Not only does the farm-out give Pura Vida a two-well carry on the block up to a cap of US$215 million, while retaining a material 23 per cent stake, but it also provides the ASX-listed company with protection against cost over-runs, which, as we saw with Neon Energy’s wildcats off Vietnam, can prove ruinous for small cap explorers.
Pura Vida, which also has exploration interests offshore Gabon and Madagascar, has an option to sell additional equity to Freeport on the same terms to protect it against over-runs – this matters more now that the well is doing so much deeper and will thus cost closer to US$140 million rather than the US$60 million for Toubkal.
This also shows that Freeport is putting real firepower behind this well, committing to drill a much more expensive well and agreeing to underwrite its partner’s share of any over-runs. This confidence must be a boost for Pura Vida and its backers as they await the arrival of the drillship.
As always, however, the drillbit will be the real test of whether this confidence is justified. Those interested in learning more about this exciting wildcat would be advised to attend Thursday’s event to learn more from MD Damon Neaves, who points out that a discovery here would be transformational for Pura Vida.