Corcel Plc ("Corcel" or the "Company"), the Angola focused exploration and production company announces its unaudited half-yearly results for the six-months ended 31 December 2023.
Highlights:
o Productive six months focused on completing the transition to focusing on oil and gas, restructuring the balance sheet, expanding the executive team and deepening the Board of Directors
o Operational focus falling firmly on Angola with additional initiatives under consideration in Angola and overseas
o Progress at KON-11, Kwanza Basin, onshore Angola, with the Company participating in the drilling of two wells in the historic Tobias Field - TO-13 and TO-14
o TO-14 currently undergoing flow testing having encountered weather and engineering delays, testing work continues on the well with oil encountered and ultimate commercial prospectivity is yet to be determined
o Operator at KON-11 intends to complete testing of TO-14 and move to test TO-13
o Data collection and planning activities expected on Blocks KON-12 and KON-16 during the course of 2024 with the goal to delineate future well targets
o Continued rationalisation of legacy mining assets including exploration results at Canegrass and ongoing disposal of interest in Mambare nickel/cobalt project
Chairman's Statement:
Dear Shareholders,
We believe that early 2024 finds Corcel on the verge of a material transformation, with the groundwork for these developments having been meticulously laid over the final six months of 2023.
During the period, the Company completed the acquisition of interests in three oil blocks in Angola, namely KON-11, KON-12 and KON-16. The acquisition of these interests, at a reasonable cost, allowed Corcel to accelerate its transition to oil and gas and facilitated our participation in the reopening of the Kwanza Basin, in Angola. The Kwanza Basin is a prolific oil and gas region, shut down prematurely due to civil war in country, which began in the mid-1970s and didn't conclude until 2002. The broad attractiveness of onshore Angola includes brownfield targets, marginal field tax rates, an extremely supportive government and an oil ministry keen to see onshore production make up for the declines offshore. In addition, we believe Angola has a compelling mix of blue-sky exploration targets offering a number of potentially high upside exploration and development prospects.
E&P activities in Angola began nearly immediately following the acquisition, with preparation for drilling the Tobias-13 ("TO-13") well in KON-11 commencing at the end of August 2023 and well spud the following month. Following the completion of the TO-13 well, the operator at KON-11, Sonangol, moved the rig to the Tobias-14 ("TO-14") location, where we drilled near the most prolific historic producer of the Tobias oilfield, having reached several thousand barrels per day alone at its peak. Tobias had been drilled and operated by Petrofina from the 1960s to the 1990s, where, on the back of only a small number of wells, peak production reached some 17,500 bbls/day.
Following completion of the TO-14 well, Sonangol moved directly to testing, before encountering a series of weather and logistical delays that slowed progress early in the year. Now, at the time of writing, formal flow testing has begun, and while engineering challenges have been encountered and have been frustrating, we remain positive, knowing we have encountered oil in the well and don't yet know its ultimate commercial prospectivity. While success is never assured in oil and gas, we look forward to continued progress on TO-14 leading to definitive results and then to the operator proceeding to test the previously drilled TO-13 well.
Following testing results from these initial wells, the Company intends to embark on a comprehensive development plan during the balance of 2024. This plan is set to include a competent persons report, which will lead to our ability, if supported by positive test results, to book reserves and potentially access other financing structures. Positive results also would lead to the installation of an early production system being installed, with an aim to reach first oil and formal production by the end of the year. These two existing wells would then over time be joined by additional appraisal wells, as the KON-11 block partners move toward full field development and reactivation of the Tobias field.
Following closely behind KON-11, development of KON-12 is likely to see a series of data collection efforts to include eFTG "enhanced Full Tensor Gravity Gradiometry" (a technology that is both cost-effective and which has been developed materially over the past decade), as well as seismic acquisition, moving on ultimately to drilling our first well in the Block. Meanwhile, at Block-16, where Corcel is the operator, we anticipate a similar order of activities as at KON-12, but with our having more control over the timing and ultimate sequencing of events. KON-16 in particular, offers substantial upside in the form of post-salt targets of 456 MMBbls and pre-salt targets of 1,029 MMBbls, a historic well that had oil shows in both the pre and post salt, and geology very analogous to the offshore Cameia discovery, which has to date identified some 500 MMBbls. The Company considers that the timing of KON-16 development may well be materially accelerated if KON-11 results prove favourable.
Meanwhile, the Company continues to plan and consider its next steps in the sector, which may include further transactions in the region and overseas, but which would, if pursued, be targeted to supplement the Company's primary focus on execution in Angola.
Elsewhere in the business, the Company saw the ongoing development and disposal of its residual mining interests, with terms agreed for the sale of our 41% interest in the Mambare nickel/cobalt project in Papua New Guinea. Initial work was also conducted and results received at the Canegrass lithium project, where data pointed to broader prospects that might include nickel and vanadium. The Board meanwhile seeks to maximize the value of these heritage assets, while maintaining a firm eye on our operations in Angola.
More broadly, the six months to 31 December 2023, saw the Company's balance sheet reinvigorated with the retirement of all historic corporate debt, and the installation of a convertible loan note facility. A new Board of Directors was recruited and installed, and our technical and financial capabilities substantially widened. All of these efforts were designed to prepare the Company for its next phase of growth. Corcel's expanded capabilities include areas such as geology, drilling, business and commercial development, facilitating Corcel moving from passive E&P investor to operator over the course of the year.
With the personnel and primary project pieces now in place, it is up to the reinvigorated team to drive the business towards its goals for the benefit of all of our stakeholders. While we have accomplished a great deal over the past six months, this is clearly only the beginning of our journey, and we look forward to a bright future in 2024 as we look to build a sizeable, listed oil and gas developer.
The Board and I want to thank our shareholders for their support.