Tembo & Onshore Rovuma basin
The Tembo Block Appraisal Licence (“Tembo”), which has an area of approximately 2,500 km2 is in north-eastern Mozambique, approximately 1,800 km north of Maputo and 100 km southwest of the Mnazi Bay field in the onshore Rovuma Basin. The block is operated by Wentworth Resources (85%) with Empresa Nacional de Hidrocarbonetos (“ENH”; 15%) as a carried partner.
In 2014, the Tembo-1 exploration well was drilled to the Cretaceous where it encountered strong gas shows, logged a hydrocarbon pay interval section, and was declared a technical discovery. In June 2016, the Instituto Nacional de Petroleo (“INP”) granted approval for an appraisal plan for the Tembo-1 gas discovery, with a two-year appraisal period. During the first two-year appraisal period Wentworth reprocessed c. 1,000 km of 2D seismic data and conducted pre-drill activities including well planning and design and scouting of the proposed wellsite location. In addition, from late Q4 2017 the Company reached out to the market to secure a partner to farm-in for the proposed Tembo-2 appraisal well. In June 2018, partly due to above ground security issues and an inability to secure a risk-sharing partner, a further one-year extension was granted, extending the licence until 15 June 2019 with no additional work commitments or exit penalties.
Activity & Outlook
In Q3 2018, Wentworth commenced a detailed re-evaluation of the Tembo discovery, creating an updated basin model which integrated in-house analysis of the Tembo-1 discovery, including re-interpretation of all the existing block and regional 2D seismic data, reservoir & rock properties, in-place and recoverable volumes, reservoir flow rates, deliverability and well-based economics.
This in-house study, which was concluded after the RPS CPR evaluation was finalized, suggests that the primary “Q sand” package as mapped on the reprocessed 2D seismic likely has in-place Pmean gross volumes of c.87 Bscf with recoverable volumes of c.61 Bscf.
Set out below are management estimates of Prospective Resources Assessment for the Tembo prospect.
|Oil and Gas – Prospective Resources
Tembo Appraisal Area, Mozambique 1
|Gross2||Net Attributable3||Risk Factor4|
|Proved||Proved + Probable||Proved + Probable + Possible||Proved||Proved + Probable||Proved + Probable + Possible|
|Oil & Liquids Reserves MMstb|
|Total for Oil and Liquids||–||–||–||–||–||–|
|Gas Reserves Bscf|
|Tembo Q Sand Prospect, Base of Slope Fan||10||61||151||9||52||128||42.1%4|
|Total for Gas||10||61||151||9||52||128|
The Q3 2018 downward volumetric revisions have predominantly been driven by a decrease in the interpreted reservoir storage properties and a more restricted sand fairway system. The Company is of the view that a gas discovery of this size with sub-commercial flow rates is highly likely to be stranded given the lack of adjacent infrastructure.
As part of the Company’s Transition and Redomicile process, RPS Canada was required to conduct a CPR of the Tembo discovery. This evaluation which commenced in May 2018, was undertaken incorporating a legacy subsurface model, prior the above in-house evaluation.
RPS Canada, has determined, based on the prior Wentworth work that the Tembo prospect has Best estimate Pmean gross risked prospective resources of 262 Bscf, with a 30% chance of expected Commercial success, further noting “there is a wide range of uncertainty in the estimated volume”. This CPR report is available on the Company’s website.
The updated in-house assessment of Tembo, coupled with the lack of a risk-sharing partner and above ground concerns, all point to further appraisal well activities not being commercially supported by the Company.
As of 17 December 2018, The Company intends to relinquish the Tembo block with a planned effective date of 30 April 2019 ahead of the end of the current appraisal term on 15 June 2019. The Company will also exit Mozambique, closing its Maputo office and shutting down activities in the Muxara and Palma camps concurrently, in order to focus on its core Mnazi Bay asset in Tanzania and its M&A led growth mandate.