Warrego’s (ASX:WGO) partner AIM listed Prospex Oil and Gas Plc (“Prospex”) currently holds a 15% interest and has the right to acquire up to a 49.9% interest in the Tesorillo Project under a Share Purchase Agreement (“SPA”) entered into in December 2017.
SPA proceeds of €2m will be used by Warrego (ASX:WGO) to fund its share of an agreed Tesorillo work programme (estimated at €3.8m) which includes a magnetotelluric programme and if successful, a well to target the Almarchal-1 discovery drilled in 1956.
Tesorillo, which contains a known gas discovery, could hold gross unrisked Prospective Resources of 830 billion cubic feet of gas (Best Estimate), with upside in excess of 2 Tcf, according to a Competent Person’s Report undertaken by Netherland Sewell and Associates (“NSAI”) in 2015.
Tesorillo comprises two petroleum exploration licences, the Tesorillo and Ruedalabola Permits, which cover 38,000ha in total. Both permits enjoy excellent access to infrastructure, as the project is located 3.9km from the North African Maghreb gas pipe line European landing point, providing easy access to high priced European gas market.Tesorillo, Ruedalabola Permits
and Existing Pipelines
Tesorillo contains the Almarchal-1 discovery well that was drilled in 1956 by Spanish operator Valdebro. The well intersected a thick section of possible gas pay, including some zones which flowed gas to surface on testing, and is located on a gravity and seismically delineated thrust ramp anticline, with closure area exceeding 70km2 and multi-Tcf potential. Drill Stem Tests and log analysis confirm 48m of gas pay from two Miocene Aljibe Formation sandstone intervals, with a further 492m of potential gas pay interpreted from logs yet unconfirmed by testing.
The ongoing work programme, undertaken by the operator and licence holder Tarba Energia S.L. (“Tarba”), is aiming to test the known gas bearing sandstone sequences, and focuses on de-risking a known gas discovery on Tesorillo. A Competent Person’s Report by Netherland Sewell and Associates (“NSAI”) in 2015, estimated Prospective Resources of 830 Bcfg (Best Estimate), with an upside of more than 2 Tcf.
The 2018 field programme consisted of three strands. Firstly, general field studies, paramount to the Environmental and Social Impact Assessment (‘ESIA’) report. The final steps for the report e.g. the hydrogeology, are well location dependent and will be completed once the drilling location has been confirmed. Next, a detailed surface structural geology mapping exercise was undertaken, which provides further geological insight to the exploration targets. Finally, the Company is conducting an Audio Magnetotelluric survey (‘AMT’). Multiple tests have been completed over important areas and those tests are currently being processed. The remainder of the survey is underway and anticipated to be completed in the second quarter of 2019. The AMT survey will assess the subsurface geology on the licence area, and test for resistivity, serving as an additional indicator of hydrocarbon presence. AMT Survey Outline and Stations in Tesorillo
Ruedalabola contains the 1957 Puerto de Ojan-1 well, located 15km to the east of Almarchal, which displayed similar gas shows to Almarchal-1 but couldn’t be tested for mechanical reasons.
Netherland Sewell and Associates (“NSAI”) have independently certified an unrisked Prospective Resource of up to 2,289 BCF* (2.3TCF) (1,946 BCF 85% net to Warrego reducing to 1,147 BCF 50.1% net to Warrego upon completion of Prospex Share Purchase Agreement) for the Tesorillo Project as outlined in the adjacent table.
More information on Tarba, can be found here