It takes courage to invest in a startup oil exploration company, and a lot of them do sadly fail to live up to their earlier hopes.
But that’s not the case for Leni Gas & Oil (LSE: LGO), which has reported success after success from the exploratory wells it’s drilling in its Goudron Field in Trinidad.
The company plans a total of 30 new development wells at the field, and on 29 October announced the spudding of the seventh, labelled GY-670. The latest well, which had reached a depth of 220 feet at the time of the announcement, is intended to reach at least 3,100 feet to test both the Goudron and Gros Morne Sandstone reservoirs.
The same announcement also gave us a further update on the previous well, GY-669, telling us it has uncovered more than 400 feet of net hydrocarbon pay. And higher-than-expected pressures at total depth “may have major benefits for future production“, said chief executive Neil Ritson.
Airborne survey
Now the attention has shifted, at least as far as the latest news goes, to the Cedros Peninsula of southwestern Trinidad, where Leni has approximately 10,900 gross acres of leases. To survey the area, the firm says it has “agreed to acquire a license to a Full-Tensor Gravity Gradiometry airborne survey over the entirety of the onshore Southern Basin of Trinidad“. The survey, which should provide high resolution, high bandwidth gravity gradiometry data, will be carried out using a fixed-wing aircraft flying over the area at 120 meters — magnetic field data and LiDAR will be acquired.
The Cedros Peninsula is largely unexplored at depth, and it is to be drilled to 12,000 feet to probe the Lower Cruse and Herrera Sandstones — oil had been found in the Lower Cruse formation in 2008, before an exploratory well failed.
The area is geologically part of the East Venezuelan Basin, which the company has described as prolific, so the potential must be very significant — in Mr Ritson’s words, “Unlocking the deep exploration potential of the Cedros is a significant medium term objective for LGO and this survey is a valuable milestone along the way“.
Many an oil explorer would be happy to have just one successful field under its control, and Leni’s Goudron field is looking like it could be a very productive one indeed with six wells drilled out of 30 and all six finding commercial oil and gas deposits.
There are two!
But add in the potential of the Cedros Peninsula, and we could possibly be looking at the oil story of the decade here.
Leni’s share price has six-bagged this year to 5p today, and it really is hard to put any kind of valuation on it at this stage — but ten years from now and we could be looking back on a decade of further climbs.