At the time of writing, shares of Global Petroleum Ltd [ASX:GBP] are up by 34.09%, to 5.9 cents per share.
Why did Global Petroleum Ltd share price do this?
The company announced it has signed an agreement to acquire an offshore petroleum block (Block 2011A) in offshore Namibia on Wednesday. Global Petroleum will hold an 85% interest in the new block as operator. Namcor ― a state-owned oil company ― and Aloe ― a local private company ― will have carried interests of 10% and 5%, respectively.
What now for Global Petroleum Ltd?
The news didn’t do much for the share price on Wednesday. Take a look at the chart below:
The market pretty much shrugged off the news. But that’s changed today. The market has taken interest of the acquisition and that’s sparked a flurry of buying. The share price topped 6-cents earlier in the day.
US$26.95 billion-capped Repsol SA [REP:SM] drilled the Welwitschia-1A well in 2014. Welwitschia-1A was drilled in the western part of Block 2011A. It targeted the Upper Cretaceous sands on the crest of a large structure. Unfortunately, the well was dry and didn’t encounter a petroleum reservoir.
Global Petroleum believes Repsol focused on the wrong target. It sees significant prospectivity ― similar to that in PEL0029 ― in the deeper Albian Carbonates, which Welwitschia-1A did not reach.
The bottom line: The block offers a high-risk, high reward play for crude oil speculators. Block 2011A is a true wildcat well.
In my view ,Global Petroleum offers significant share price potential, if the company’s theory is correct and crude oil exists in the deeper Albian Carbonates.
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