CAMAC Energy Inc. (ticker: CAK) is a Houston-based oil and gas company engaged in the exploration of offshore oil and gas leases in deep water Nigeria. The Company was founded in 2005 and has offices in Houston, Texas, Nairobi, Kenya, Banjul, Gambia and Lagos, Nigeria.
CAMAC Energy recently presented at EnerCom’s The Oil & Services Conference™ 12 on February 19, 2014. Click here for a list of questions asked at CAK’s breakout session following its presentation at the conference.
Oyo Field is the Focus
CAMAC Energy finalized a pivotal year in the company’s history with the announcement of its Q4’13 results on March 13, 2014. CAK has set the stage for 2014 by securing infrastructure for its Oyo Field offshore Nigeria, including the Energy Searcher drillship for two years and the FPSO (floating production, storage and offloading) vessel Armada Perdana for up to seven years. The company also assumed full ownership of Oil Mining Lease (OML) blocks 120 and 121 by acquiring the remaining economic interests from its venture partner. OAG360 notes that over the past few years, CAMAC Energy management has been able to successful transform the company from a non-operating entity with varied and, arguably, unrelated portfolio assets split between Africa and Asia, into an up-and-coming small cap African-focused operator with production, sizable 3P reserves upside, and a demonstrated ability to pursue and secure new exploration leases in East and West Africa. Further, the management team has shown the investment community it is also capable of executing corporate level transactions to obtain 100% working interest in sizable offshore oiil fields in West Africa.
After months of testing, the Oyo-7 well was drilled in the current quarter by the Energy Searcher and encountered 115 feet of net oil pay and 93 feet of net gas pay. An additional 65 feet of hydrocarbons were discovered in the Miocene – a formation previously not believed to exist in the stated blocks. The Miocene is the most prolific producing zone offshore Nigeria and Shell’s (ticker: RDS.B) Bonga field has produced 450 MMBO since the area was brought online in 2005. The Miocene’s potential is vast: It accounts for 70% of the 602 MMBOE in unrisked resource potential on CAK’s OML blocks.
Completion and horizontal development of the Oyo-7 is scheduled to commence in April 2014. The company has identified two future drilling locations as the Oyo-8 and Oyo-9 wells. Management says it expects initial production from the Oyo-7 to reach 7,000 BOEPD – dwarfing CAK’s current production rate of roughly 2,000 BOEPD. The Oyo-8 well is expected to be placed online within the fiscal year and will provide an additional 7,000 BOEPD, boosting the company’s production totals to 16,000 BOEPD by year-end 2013. Production will be extracted purely from the Pliocene formation.
In a conference call following the release, Dr. Kase Lawal, Chairman and Chief Executive Officer of CAMAC Energy, said the company will drill its fourth Miocene exploration project with a partner within the next 12 to 18 months. The company has successfully drilled all seven of its exploration projects to date. Achieving a 100% success rate for offshore West Africa exploratory wells is a remarkable achievement for any oil company, and particularly for a company of CAMAC Energy’s market capitalization.
On the financial side, CAK closed the purchase of the two OML blocks on February 21, 2014. The company also closed the first $135 million of a $270 million equity investment, which entails a listing on the Johannesburg Stock Exchange while maintaining its stock listing on the NYSE Market Exchange. The company reported a net loss of $5 million ($0.01 per share) for Q4’13 and $15.9 million ($0.04 per share) for fiscal 2013, largely due to the ongoing preparation of the Oyo play.
Offshore Studies Continuing Across Africa
CAMAC is arguably as active as any African-focused small cap company, as it is currently exploring four blocks located offshore Kenya. A 2D seismic shoot is currently underway on two of the blocks and is expected to finish within March 2014. The company is preparing the same shoot to cover its remaining two blocks. Studies on the retrieved data will determine the location of CAK’s first onshore exploration well in the region, which is expected to be drilled in 2015.
The same process is underway on CAK’s two offshore blocks in Gambia. A 2D seismic survey has been completed and the possibility of conducting a 3D survey is being considered. CAK expects to drill the first onshore exploration well in 2016.
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