Ethiopia’s wells costs Africa Oil $30.8 million in losses

Africa Oil has announced it will be writing off $30.8 million previously capitalized in blocks 7 and 8 on expenditures in Ethiopia.

According to the company the El Kuran-3 appraisal well on block 8 which was drilled in the first half of 2014 and which is currently suspended pending further evaluation after it encountered a significant but tight gas-condensate zone in Jurassic Hammanlei carbonates will be written off as Africa Oil weighs options regarding the future of the blocks that are being evaluated.

“Upon further evaluating the drilling results of the El Kuran-3 well, the Company has written off $30.8 million of previously capitalized Blocks 7/8 exploration expenditures in Ethiopia,” reads the latest statement from the company.

El Kuran-3 was an appraisal of a discovery made by Tenneco in the 1970’s and is part of the $37.5 million in operating expenses that the company has spent in the last six months compared to the same period in the prior year.

Africa Oil has had a shaky start in Ethiopia in the first half after the Gardim-1 exploration well on the eastern flank of the Chew Bahir Basin disappointed led to it being plugged and being abandoned.

The company and its partners say that drilling operations are being demobilized while these results are integrated into the regional basin model even as seismic interpretation continues on independent prospectivity.

Currently the company which is a operator in the Rift basin with 50 percent interest together with its partners are making preparations to acquire a minimum 400 kilometer 2D seismic program over the Rift Basin Area commencing in the fourth quarter as it continues to acquire a 1,000 kilometer 2D seismic program on the Adigala Block.

In Blocks 7&8 Africa Oil has 30 percent interest alongside  New age and EAX with 40 percent and 30 percent respectively while in the Adigala Block the company has 10 percent interest alongside New age with 50 percent and Genel Energy with 40 percent.