Cobalt International Energy, Inc. has announced a net loss of $57 million, or $0.14 per basic and diluted share for the first quarter of 2014, compared to a net loss of $128 million, or $0.31 per basic and diluted share, for the first quarter of 2013.
Capital and operating expenditures (excluding changes in working capital) for the quarter ending March 31, 2014 were approximately $178 million. Cash, cash equivalents, and investments at the end of the first quarter were approximately $1.6 billion. This includes about $262 million designated for future operations held in escrow and collateralizing letters of credit, but excludes approximately $76 million in the TOTAL drilling fund for the Gulf of Mexico.
The Angolan National Concessionaire Sonangol, Cobalt and the Block 20 partners – Sonangol P&P and BP – have announced the results of the drill stem test for the Orca #1 Pre-salt deepwater exploration well in Block 20, offshore Angola. The well was successfully tested at a facility-constrained rate of 3,700 barrels per day of oil and 16.3 million cubic feet per day of gas with minimal drawdown (approximately 1%) in the upper Sag section of the discovery. The results of this flow test confirm that the Orca #1 well is capable of substantial sustained oil production rates. The well was drilled to a measured depth of 12,703 feet (3,872 meters) and Cobalt estimates that it encountered approximately 250 feet (76 meters) of net oil pay predominantly in the upper Sag interval. Results of an extensive logging, coring and fluid acquisition program in addition to the drill stem test confirm a significant discovery, which is the largest oil discovery found to date in the Kwanza Basin. Cobalt’s post drill estimates indicate a resource range of between 400 and 700 million barrels of oil.
This is Sonangol and Cobalt’s fifth deepwater Pre-salt discovery offshore Angola. The Orca #1 well was drilled on a prospect previously penetrated by the Baleia #1A well in 1996; however, this well was not tested and was subsequently abandoned. The Baleia #1A well is approximately five kilometers from the Orca #1 discovery. Cobalt, as operator, has a 40 percent working interest in Block 20. Partners are Sonangol Pesquisa e Produção, S.A. and BP Exploration Angola (Kwanza Benguela) Limited, each with a 30% working interest.
“The Orca discovery is by far the largest and most significant oil discovery to date in the Kwanza Basin, and is potentially one of the largest oil fields in Angola,” said Joseph H. Bryant, Cobalt’s Chairman and Chief Executive Officer.
“We are very encouraged and excited by our DST results and the extraordinary flow capacity of the Orca reservoir which gives us confidence that wells in the field will flow oil at rates equal to or greater than the rates we expect in our Cameia field. In addition, our drilling operations continue to improve, and our understanding of the Kwanza Basin reservoir systems has greatly improved by the extensive testing program that we carried out on this well. The excellent reservoir quality we encountered at Orca has positive implications on the rest of Cobalt’s vast Kwanza Basin portfolio, including our five discovered fields as well as our exploration prospects we have yet to drill.”
Cobalt also provided an update on the Cameia field in Angola. Cobalt has commenced drilling the Cameia #3 well. First oil for Cameia is anticipated in 2017, assuming project sanction in late 2014.
Also in Angola, Cobalt announced that Angola’s Ministry of Petroleum granted Cobalt and its partners a two-year extension of Cobalt’s Angola Block 9 license. Once operations are completed on the Cameia #3 well, Cobalt will commence drilling the Loengo #1 exploration well on Block 9.
In the Gulf of Mexico, Cobalt announced that it is participating in the Shell-operated Yucatan Inboard Lower Tertiary appraisal well with a 5.3% working interest. In addition, Cobalt is participating in the Chevron-operated Anchor #1 exploration well with a 20% working interest. Anchor is an Inboard Lower Tertiary test with Miocene potential. Cobalt anticipates results from both the Yucatan and Anchor wells in the second half of 2014. Also in the Gulf of Mexico, the Anadarko-operated Heidelberg field is on track for first oil in 2016, with development drilling expected to start sometime this summer.
As part of its portfolio renewal effort, Cobalt announced that it was pleased to be the high bidder of 44 of its 46 submitted bids at the Central Lease Sale 231 at an attractive cost of entry in the deepwater Gulf of Mexico.