With news that Simba Energy Inc. (TSX-V: SMB.VN) had received a technical report compliant to N1 51-101 and CPR standards in respect to their 100% interest in the Production Sharing Contract for onshore Block 2A, Kenya, comprising 7,802 sq.km within the Madera-Lugh basin, near the juncture with the Anza basin and Lamu Embayment/Basin, shares of the oil and gas exploration company focusing on underexplored overlooked basins in its pursuit of hydrocarbon opportunities in Africa enjoyed a sudden spike on Tuesday, hitting a 52-week high of 0.265 before pulling back to the 0.220 level where they currently sit.
Even with the slight slide to 0.220 shares of SMB.VN, remain well above their 50-day moving average of 0.168 and their 200-day moving average of 0.110 and their trading volume by mid-day on Tuesday had already surpassed the 4.7 million mark, more than twice their 50-day average and 7x their 200-day average, with several hours left in the session.
Obviously investors have shown some enthusiasm concerning this technical report, completed by the independent petroleum consultant Sproule Associates Limited. That enthusiasm has centered on the reports identification of three prospective leads at four representative sesmic horizons. As stated in SMB.VN’s press release on Tuesday, “As its main conclusion, Sproule’s report confirms the exploration potential of Block 2A and supports existing plans to further delineate these leads as proposed with additional passive micro-seismic, 2D or 3D seismic, and gravity gradiometer surveys.”
The initial assessment initial assessment completed by Sproule showed the Gross Unrisked Undiscovered Petroleum Initially In-Place, (Mean) was 1,927.1MMboe and the Gross Unrisked Prospective Resources (Mean) was 445.3MMboe. The Total Gross Risked Mean Prospective Resources was 26.9MMboe. What this assessment does, in the words of Robert Dinning, President and CEO of SMB.VN, is it “reaffirms our technical team’s initial premise to target Block 2A during the application process as it was highly prospective with great potential for significant accumulations.”
But Dinning doesn’t stop at Block 2A but extends his optimism to additional areas saying, “we now also believe it is relevant to note how this same area lies within the junction of two (basin) trends as being geologically similar to the successful Ngamia-1 well, recently drilled by Tullow Oil and Africa Oil, that is also located at the junction of two trends. As a next step we see our passive seismic program as offering a very strong compliment to the existing seismic we have for these leads.”
While SMB.VN may see potential in additional areas for now they appear to be focusing on the exploration of Block 2A and have identified their plans as continuing data gathering and review of technical reports, satellite imagery, and interpretation of existing 2D seismic, gravity and magnetometer as well as carry out block-wide field geological and geochemical studies.
Additionally an Infrasonic Passive Differential Spectroscopy seismic survey covering 4,000 sq.km with 250 measurement points on a variable spacing is being conducted by GeoDynamics S.R.L; areas of potential identified by the passive micro-seismic survey will be further evaluated by conventional 3D or 2D seismic and/or gravity gradiometer prior to selecting a drill site; an additional 1,000 km of 2D seismic; and they are designing a drill program to evaluate top leads derived from these seismic programs.
Aside from the activity in Kenya SMB.VN also recently announced that they had received final approval for 60% of the Production Sharing Contract (PSC) in blocks 1 & 2, onshore Guinea from the Republic of Guinea’s Minister of Mines and Geology. The two blocks total 12,000 sq.km onshore in the Republic of Guinea’s Bove basin, which has extensive presence of surface oil seeps and three known reservoir systems with fair to good reservoir parameters in both clastic sediments and carbonates. According to SMB.VN “blocks 1 & 2 possess significant hydrocarbon exploration potential that supports taking an aggressive near-term exploration approach.”
As it stands now, Simba is set to provide 100% funding of all program costs in the first year, and 60% of all program costs thereafter. Dinning commented about the announced final approval, “We are pleased to have received formal approval of this transaction, including the right to be the operator, and can now proceed with the investment necessary to explore an asset that we believe has great exploration potential.’
