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Kenyan Oil, Hot and Getting Hotter

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An interview with Taipan's Maxwell Birley.

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James Stafford: What about other prospects, like the Kinyonga well?

Maxwell Birley: Kinyonga is the next big prospect that is going to be drilled by Africa Oil Corp. and that is very meaningful for us. Kinyonga, which is on Block 9, will be located relatively close to our block, is both Tertiary and Cretaceous prospect. It has an unrisked resource estimate of 320 million barrels prospective, and it is one of the largest prospects in Africa Oil's portfolio of drilling targets. Africa Oil also has another prospect called Pundamilia which is even closer to our block. This prospect has a unrisked resource Best estimate of 402 million barrels and a High estimate of 952 million barrels which I believe is the largest prospect in Africa Oil's portfolio.

James Stafford: And what is the status of Kinoyonga?

Maxwell Birley: The timeline Africa Oil report for Kinoyonga is the second half of 2013.

James Stafford: That would be a pretty big corollary for Taipan ….

Maxwell Birley: I think that even prior to getting those drilling results; investors are going to become more aware that the Tertiary play extends into our block. This was proven by the Hothori well which encountered 9500 ft. of Tertiary sediments. Better than this based on seismic data we estimate that in parts of the block there could be greater than 15,000 feet of Tertiary sediments.

James Stafford: What can we expect from Taipan over the next six months?

Maxwell Birley: Taipan has contracted BGP to acquire up to 800 kms of 2D seismic survey and Arkex to acquire a block wide FTG survey both over Block 2B. The seismic will commence recording in January 2013 and the FTG in February. Both surveys will be completed and interpreted prior to the 1st June deadline to complete the work. We expect to enter the first additional exploration period and are planning on drilling a well late 2013 early 2014.

Taipan has a 20% interest in Block 1 where Afren has recorded 1900 kms of seismic data.

After the seismic has been processed and interpreted the company will commence preparations for well to be drilled in late 2013/early 2014.

James Stafford: What do you expect to learn from this North Eastern data?

Maxwell Birley: We will be acquiring world class seismic data with an extremely high fold in Block 2B. We may record data with fold as high as 540 (other operators in Kenya usually only record at 60 fold). We will do this so that we get excellent signal to noise ratio and seismic data improvement. This will then enable us to predict with some certainty the areas that have high shale to sand ratios. This in turn will indicate where the Tertiary lakes sediments were deposited. This will dramatically increase the chances of drilling a successful oil well.

James Stafford: Let's close off then with a note on security and Taipan's potential concerns in that area...

Maxwell Birley: Our acreage is in a remote region with very few inhabitants. We always take the appropriate health and safety precautions for example we've carried out detailed security risk assessments and we have visited the areas on a number of occasions. We work with other operators and security companies to ensure we have good local information.

To mitigate the risk, we have 50 to 60 armed police on the seismic crew to supply physical security. More importantly we have excellent support from the government and local authorities. We are in the process of undertaking some CSR water projects so that local people benefit from our activities. We also have a team from the area that is in the field communicating continuously to ensure that the local community understands what we are doing and observes the benefits of working with Taipan.

So in summary, we take it all pretty seriously. There are risks, however, it's a place where you can work, so we're being very respectful and careful to nurture successful relationships.

James Stafford: Has Kenya's intervention in Somalia had any impact on exploration in the border area?

Maxwell Birley: Yes, it has ensured that oil companies can undertake their work in relatively safe conditions.

James Stafford: Mr. Birley, best of luck. Thank you for your time and we will check in with you later in the year.

This article was written by James Stafford of Oilprice.com.
No positions in stocks mentioned.
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