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UPDATE 1-Cobalt Intl: Angola oil test beats expectations
February 10, 2012 / 5:00 PM / 6 years ago

UPDATE 1-Cobalt Intl: Angola oil test beats expectations

* Says Cameia-1 well could produce over 20,000 bpd

* To start appraisal drilling programme immediately

* Stock soars 38%, analysts say test result impressive

LISBON, Feb 10 (Reuters) - Cobalt International Energy Inc said results from tests at a deep sea oil well off the coast of Angola had exceeded expectations and had increased the company’s confidence in its West African pre-salt exploration prospects.

Cobalt, whose main stakeholder is Goldman Sachs, said tests at its Cameia-1 well in Block 21 confirmed the presence of a 1,180 foot “gross continuous oil column”.

“Cameia is an extraordinary success. The results have exceeded our pre-drill expectations and have increased our confidence in our entire West Africa pre-salt exploration inventory,” said Cobalt Chief Executive Joseph Bryant in a statement on Friday.

Analysts and investors believe drilling thousands of metres under the Kwanza Basin seabed through blocks known as pre-salt, could match huge discoveries made off the Brazilian coast in similar rock formations in recent years.

Cobalt shares were up 37.9 percent at $32.92 at 1613 GMT, outperforming the Dow Jones U.S. Exploration & Production index , which slipped 0.95 percent.

The test results led Howard Weil to raise its recommendation on the stock to outperform from market perform and lift its target price to $41 per share from $23.

Analysts at Citi said the test results were “quite impressive” and that the Cameia well’s reserve potential could exceed 2 billion barrels and be worth up to $2.6 billion or $6.60 per share for the company.

Bryant added that the company will immediately start an appraisal drilling program to further assess the size and extent of the Cameia oil discovery and to drill to deeper objectives.

“Based upon our analysis of the test data, if not limited by the test equipment on the rig, we believe the well would have the potential to produce in excess of 20,000 barrels of oil per day,” said James Farnsworth, Cobalt’s chief exploration officer.

Cobalt has a 40 percent stake in Block 21, and its three partners are state-owned Sonangol and local companies Nazaki Oil and Alper Oil.

The Houston-based firm was one of seven companies to win licences to operate pre-salt blocks and sign production sharing agreements with Sonangol in December..

The other companies were France’s Total, Britain’s BP, Norwegian firm Statoil, Italy’s ENI , Spain’s Repsol and U.S. firm ConocoPhilips .

Cobalt is also the operator of Block 20, in which is has a 40 percent working interest.

The company, which also has assets in Gulf of Mexico and Gabon in West Africa, has said it is planning its first well in Block 20 in 2013.

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