Australia-listed Armour Energy has suspended work on its 2D seismic shoot in Uganda as heavy rains have made work impossible.
The company declared force majeure on the seismic acquisition in a letter to the Ugandan energy ministry on October 15. It singled out severe storms and floods in the Kanywataba area for preventing vehicles from using access roads, halting the contractor from carrying out the line clearing, surveying and drilling required.
The amount of time under which operations are held under force majeure will be added to the end of the renewal term, it said. Once work begins, it should be able to complete the work fairly quickly, it said. Water levels are expected to restart in early 2020.
Around 89% of the land clearing under the seismic programme had been completed and 86% of the surveying – around 93 km. Drilling of boreholes, into which seismic charges are placed, has reached 810, or 37.5% of the total. Work on the seismic was being carried out by Teclab.
Armour was granted the exploration licence on the area in September 2017. The initial two-year term expired this September. The Ugandan Ministry of Energy and Mineral Development has extended the licence for two years, until September 2021. Armour holds a 16.82% beneficial stake in the area while DGR Global has 83.18%. DGR also has an 18.98% stake in Armour, qualifying as the company’s largest investor.
The extension is subject to a number of conditions, including the completion of the seismic shoot. Armour must also consider what part of the area it wishes to relinquish and must provide a performance guarantee for its work programme in the second phase.
The Kanywataba area is at the southern end of Lake Albert, fairly close to the Kingfisher development. This is operated by CNOOC Uganda, in partnership with Tullow Oil and Total. These three companies have halted work on the proposed East African Crude Oil Pipeline (EACOP), which would be instrumental in unlocking additional resources from the area.
Uganda is in the process of holding a licence round offering five blocks, including the 637 square km Turaco, which is adjacent to Kanywataba. Licences are expected to be awarded in December 2020.
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