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In separate statements issued today, Range Resources and Red Emperor Resources announced the commencement of drilling operations on the Dharoor Block in Puntland, Northern Somalia.
The announcements are in conjunction with the earlier press release of the said block’s operator, Horn Petroleum Corporation, a quoted company on the Toronto Stock Exchange.
It is the first exploration in 20 years in the self-declared autonomous state, having previously been explored by several oil companies such as Shell, Conoco, Phillips, and Amoco.
Plan of action
The three companies are on a joint venture under a Product Sharing Agreement signed in 2007. Red Emperor and Range Resources hold 20% interest each with the remaining 60% held by Horn Petroleum.
The companies plan to drill 3,800 meters deep into Shabeel-1 well, while a 5—metre pilot hole has been started in the Shabeel North-1 well, in the said block believed to hold some 300 million barrels of recoverable oil, according to internal company estimates.
Reasoning behind the exploration
Exploration in the area was based on the belief that the Shabeel and Shabeel North Prospects are part of the system as the Masila and Shabwa Basins in Yemen. Geologists at Hunt Oil Corporation, who successfully discovered oil in the Gulf of Aden, believes that Northern Somalia and Yemen are connected by a great underground rift or valley.
Long Overdue
Greg Randy, Executive Director at Red Emperor referred the undertaking as long overdue but acknowledged the oil potential of Northern Somalia which remained untapped because of domestic instability.
Somalia had been in the international limelight for news of piracy operations around its coasts. Puntland, where the exploration is taking place, is held as the hub of the pirates.
The Puntland government is also in sporadic fighting with its neighboring breakaway region of Somaliland over territorial disputes.
Optimistic Outlook
On the other hand, Range Resources Executive Director, Peter Landau expressed his gratitude on the efforts and participation of the Puntland Government, its people, and the Dharoor Valley communities for the “historic.. monumental achievement”.
He said:“We hope that success…will, given the royalty and profit share arrangements in place, lead to significant infrastructure and employment benefits for Puntland and Greater Somalia.”
Mr Bandy added:“We look forward to keeping the market informed of the progress of this landmark well and hope its success leads to significant benefits for Puntland and its people.”
However, the market does not share the same excitement as the companies’ executives. Red Emperor shares are down 14.8%, or 3.25 pence below its previous trading, to 18.75 pence while Range Resources’ stocks are trading at 11.25 pence, 15% lower than yesterday’s close of 13.25 pence.
