Circle Oil announces "significant" gas discovery on Sebou permit

Middle East- and North Africa-focused oil group Circle Oil impressed the market on Monday after announcing a “significant gas discovery” onshore Morocco.

Results from the drilling of KSR-12 in the Sebou permit showed that the well encountered gas shows at two different levels within the objective ‘Hoot’ sands.

The company said the net gas pay encountered from wireline log analysis is 19.5 metres in the main target Intra Hoot sands and 1.0 metre in the Upper Hoot.

“This is greater than pre-drill sand thickness expectation,” it said.

The main Hoot sands flowed at a sustained rate of 8.09m standard cubic feet per day.

"We are delighted with the results of the KSR-12 well, which has found the thickest gas sand interval to date of our Sebou wells,” said chief executive Chris Green.

He said that he well will “add significant volumes to our reserves for potential gas production and at rates not subject to oil price fluctuation”.

KSR-12 was the third of six wells to be drilled in the Sebou permit with partner ONHYM.

Analysts at Investec maintained a ‘buy’ rating for Circle Oil on Monday, saying the new discovery makes it “three-from-three” from the company’s 2014/2015 Moroccan campaign.

“The well encountered a thicker sand section than pre-drill prognosis, flowed at the highest rate of the campaign and should result in an increase to existing reserves booked in Morocco,” the broker said.

Circle’s shares were up 8.4% at 11.25p by 10:36.