Somalia Posted July 23, 2012 Disappointment rained down on Range Resources (RRL) and Red Emperor Resources (RMP) investors on Monday as the companies found water, rather than oil, in their Shabeel North well in Somalia. Shares in both companies dropped as the news sank in. In a brief statement, the partners said: "An open hole Drill Stem Test was conducted over a 50 metre gross interval (1,910 metres - 1,960 metres) which contained several sands in the upper portion of the primary Jesomma Formation which had oil shows. The test recovered fresh water (1,200 parts per million Cl-) without any traces of oil." The news was particularly disconcerting as last week's update on the work said it had "penetrated a 50 metre gross section of upper Jesomma sands with oil shows". It went on: "An open-hole drill stem test is currently underway to determine if this zone is oil or water bearing and should be concluded within the next 24 to 48 hours." When asked about this, a spokesman for the company told Interactive Investor the drilling had moved through several rock layers where traces of oil may have been found. "Until you test, you don't know what you have found," he said. Next steps The firms now plan to drill ahead to the originally planned depth of approximately 2,400 metres which will penetrate the remaining section of Jesomma sands. At that point the entire section will be evaluated by electrical logging to determine if further testing is warranted. The drilling is targeting Upper-Cretaceous Jesomma sands, which had good oil and gas shows in the Shabeel-1 well, 3.5 kilometres to the south. The well, which was spudded in June, is the second in the drilling campaign and is also operated by Horn Petroleum, which owns a 60% interest. Range and Red Emperor both hold a 20% stake. Investor reaction On the Interactive Investor discussion board for Range, feelings were running high. "There is no oil at the intermediate depth- we never expected any until Horn told us last week that there might be so nothing has changed except a ridiculous red herring which has succeeded in bringing share prices of RMP and RRL right down," commented user '5iron'. He added: "If there had been no RNS saying there might be oil, share price would still be higher- it's a ridiculous situation - maybe contrived - maybe not. So if you disregard the whole episode then this is one heck of a good buying opportunity!" 'Newtothisgame2' said "Tough luck guys, bad, bad result but for those looking to hold longer term today will offer opportunities for very cheap shares if you still believe in RRL." Analyst view Despite the negative development, analysts were keeping the faith. "Exploration in Puntland has proven to be challenging and we expect the shares to come under pressure on these results. That said, we believe that there is more to Range than Puntland's exploration risk/reward. We believe that the Trinidad operation, where production volumes are nearing 1,000 [barrels per day], is core to the group and provides an underpin of 10p/share," said Panmure Gordon's Leila Reddy. She retained her 'buy' recommendation. Also holding firm was Fox-Davies which said: "The news that the mini well test has flowed water opposed to oil is certainly a disappointment, but not yet the killer that it sounds like it is; it must be remembered that the target horizons are significantly deeper and drilling will now continue to these deeper target horizons. So, while this news is disappointing, it is not yet a 'kill' for the exploration well." The broker added it was maintaining its 'buy' stance, "especially given the prospective 'appraisal' CBM acreage in Georgia, and in respect of Range Resources its Trinidadian operations - and retain target prices of 27p for Range Resources and 65p for Red Emperor." Quote Share this post Link to post Share on other sites
Somalia Posted July 23, 2012 Dr_Osman, Kingofkings, Mooge and I. Quote Share this post Link to post Share on other sites
Timur Posted July 23, 2012 A dark day for Puntland. Quote Share this post Link to post Share on other sites
Somalia Posted July 23, 2012 It truly is, I am depressed, however I was told by a confidant that water is usually found in the wells, so if they dig deeper and find nothing, I am afraid, it's a suicide fest for all of us. Quote Share this post Link to post Share on other sites
Burn Notice Posted July 23, 2012 Timur;852564 wrote: A dark day for Puntland. more to this than meets the eye... wait for the new constitution to be ratified giving the federal states the power to manage their natural resources and then share profits with the federal government and we will see the real story watch this space Quote Share this post Link to post Share on other sites
Carafaat Posted July 23, 2012 The news that the mini well test has flowed water opposed to oil is certainly a disappointment, I have to disagree. I am glad they found water. Water is the source of life and Bari could use some water. Quote Share this post Link to post Share on other sites
DoctorKenney Posted July 23, 2012 You're unbelievable Caraafat....Just unbelievable. you'd rather there be water inside the well than oil....oil which sells at $100 a barrel? Quote Share this post Link to post Share on other sites
GaraadMon Posted July 23, 2012 Without any traces of oil? Then why did they they say there were oil shows last week? Quote Share this post Link to post Share on other sites
Macallinka Posted July 23, 2012 ^Gimmick perhaps ? Quote Share this post Link to post Share on other sites
GaraadMon Posted July 23, 2012 Perhaps, this company has been shady from the get go, but water in Somalia is hardly news. Heck, Nugaal is known for it's large groundwater supplies and springs. This is odd though, everyone knows that oil is normally found above water, unless the oil is sealed away at lower depths. Quote Share this post Link to post Share on other sites
Chimera Posted July 23, 2012 Nooo.....nooo....noooo please god noooo....don't shatter my dreams I'm going to eat icecream at afur and lots of chocolate to comfort myself, this update is NASTY!! Quote Share this post Link to post Share on other sites
GaraadMon Posted July 23, 2012 Chimera;852644 wrote: Nooo.....nooo....noooo please god noooo....don't shatter my dreams I'm going to eat icecream at afur and lots of chocolate to comfort myself, this update is NASTY!! The lack of diversity in my portfolio is NASTY!! Looks like I'll have to prostitute myself for bus money this year if this doesn't pan out. Quote Share this post Link to post Share on other sites
oba hiloowlow Posted July 23, 2012 Sad indeed :( Quote Share this post Link to post Share on other sites
DoctorKenney Posted July 23, 2012 Oil isn't the answer to our financial problems though. If we don't have oil we are perfectly capable of overcoming this. I am strongly in support of building a solid manufacturing base in Somalia Quote Share this post Link to post Share on other sites
B_A_L_L_E_R_Z Posted July 23, 2012 ow well, puntlanders can always go back to piracy as a last resort Quote Share this post Link to post Share on other sites
