Kilosa – Kilombero

Map of Kilosa-Kilombero Project
Click to enlarge 

 

Ownership: Otto Energy 50%, Swala Energy 25%, Tata Petrodyne 25%
Status: Exploration
Location: Onshore East Africa
Area: 17,675 km2

A total of 440 km of 2D seismic were acquired over the Kilombero basin in 2013 and 2014. Results suggest the presence of a Neogene-age basin with a maximum depth to basement in excess of 3,000m. The age of the sediments recorded (based on low seismic velocities) appears to be similar to that of sediments observed in the now proven oil basins of Lokichar (Kenya) and Lake Albert (Uganda), where Africa Oil (TSX.V:AOI) and Tullow Oil (LSE: TLE) have had significant success.
 
Dip lines across the basin suggest the presence of both structural traps and traps against the main basin-bounding fault, with possible Direct Hydrocarbon Indicators (DHIs or ‘Flat Spots’) observed at several levels at the crest.
 
The joint venture is preparing to undertake drilling of the Kito-1 exploration well in 2H 2016 targeting a Miocene aged basin bounding fault structure proximal to the prognosed basin source kitchen. The Kito structure has been estimated to contain a gross prospective unrisked recoverable resource of between 60 and 574 MMbbl with a best estimate of 194 MMbbl.
 
Contracting of the required equipment to undertake the drilling operations has commenced and the well is expected to take approximately one month.
 
During the Quarter Otto successfully secured a farm-out of a 25% participating interest in the Kito-1 exploration well to MV Upstream Tanzania Limited. MV Upstream Tanzania Limited is a joint venture between Vegas Oil & Gas Limited and Motor Oil Hellas SA.
 
Under the terms of the farm down agreement with MV Upstream:
·   MV Upstream shall pay to Otto the sum of US$2.3 million (inclusive of applicable taxes) as reimbursement of historical costs incurred by Otto.
·   In addition to paying its 25% participating interest share of well costs, MV Upstream shall carry Otto’s remaining 25% working interest through the drilling of the Kito prospect up to an amount of US$2 million.  
    Costs over and above this capped amount shall be payable by Otto in accordance with its remaining 25% participating interest.
·   In the event of a discovery at Kito, MV Upstream shall carry Otto’s remaining 25% working interest through the drilling of an appraisal well up to an amount of US$1 million.
 
The transaction is conditional upon customary Tanzanian regulatory and joint venture approvals prior to completion.
 
Otto’s Net Prospective Resource estimate post farm-down ranges from 15 to 137 MMbbls with a Best estimate of 48.5 MMbbls for the Kito structure. Success on the first exploration well in this basin would unlock significant additional follow-up potential.
 
 

 

The southern Kilombero basin is believed to be predominantly Neogene in age and exhibited anomalous stressed vegetation identified as being potentially caused by hydrocarbon seeps.

During the second year of the contract the joint venture acquired 3,000km 2D seismic over the Kilosa-Kilombero basin, with results indicating large scale structures and sediments similar to the oil basins of Lokichar (Kenya) and Lake Albert (Uganda) where Africa Oil and Tullow Oil have had significant success.

The results of this seismic program identified the Kito prospect, which yielded a prospective resource of between 19.2million barrels and 169.6 million barrels net to Otto, with a best estimate of 60.4 million barrels.