Canadian-listed junior Longreach Oil & Gas has expanded its acreage in Morocco with a farm-in deal that gives it operatorship of the onshore Sidi Moktar development licence.
The company said the agreement with Maghreb Petroleum Exploration (MPE) will give it a 50% operated stake in Sidi Moktar, located in the Essouaria basin in central Morocco, as well as operatorship of three additional exploration licences.
Longreach now intends to launch a share offering in Canada aimed at raising C$25 million ($25.6 million) to finance an exploration campaign on the permit consisting of up to five wells, as well as further develop its other assets in the North Africa country.
Chief executive Bryan Benitz said the acquisition has the potential to be “transformational” for the company.
The prospective Sidi Moktar licences have so far produced 30.5 billion cubic feet of gas, according to the Moroccan National Office of Hydrocarbons & Mining (ONHYM).
An independent resources study by Calgary-based AJM Petoleum Consultants made a best-case gas in-place estimate of 776 Bcf for five existing fields within Sidi Moktar.
The licence surrounds the existing producing Meskala field, currently pumping out 3.5 million cubic feet per day, with gas pipeline infrastructure in place that runs through the permit area.
Tie-in to this pipeline is believed to be feasible, with gas expected to be piped to the town of Youssoufia, where major phosphate plants exist with unmet natural gas demand.
The Kechoula field located in the Sidi Moktar licence, which is currently shut-in, was discovered in 1957 and has produced 19 Bcf of gas from the Jurassic formation.
Under the farm-in deal, Longreach will fully fund MPE’s commitment programme, which includes shooting of 100 square kilometres of 3D seismic and the subsequent drilling of two wells on the Zag and Tarfaya licences within the main permit area.
Another exploration well is also targeted on either of the Sidi Moussa or Foum Draa licences, subject to available funding.
Longreach currently has interests in four exploration licences in southern onshore and offshore Morocco, covering 11.8 million acres.
The country is experiencing a nascent rebirth of its upstream sector with a favourable fiscal regime luring back foreign explorers, including Repsol, San Leon Energy, Circle Oil and EnCore Oil, to tap its undiscovered potential after a long exploration hiatus.
ONHYM has identified shale gas potential and is making a concerted effort to develop the country’s huge shale oil reserves.
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