IVZ locks in rig for another 2 years

Our oil and gas Investment Invictus Energy (ASX: IVZ) just signed a contract that keeps its rig on site for another 2 years.

For us the timing of the rig contract is especially important.

Right now IVZ is drilling its Mukuyu-2 sidetrack well.

The ultimate goal of that well is to try and officially declare a basin opening discovery.

If a discovery is declared we think it could open the floodgates to more exploration - where the discovery is then proved out with more drilling.

At a very high level this rig contract enables IVZ to prove how much of its ~5.5 billion barrels of oil equivalent prospective resource can be brought up into the reserves category and moved further along into development.

To do all that work, IVZ needs a rig and will likely have to drill several more wells - a similar playbook we saw when Africa Oil ran ~10 years ago after it made its discovery in Kenya.

Africa Oil declared a discovery, saw its market cap re-rate by over 1,000%, raised hundreds of millions of $, drilled wells back to back and managed to prove up its discovery.

NOTE: There are no guarantees that IVZ will achieve anything similar to AOI, the AOI case study is just to understand what a successful discovery looks like. The past performance of AOI is not an indicator of the future performance of IVZ.

With that said, right now, we think IVZ is in a similar position to where Africa Oil was PRE-discovery.

By keeping its Exalo rig in the basin for a further 2 years, IVZ has bought itself the optionality to be able to do exactly what Africa Oil did without having to look for and wait for another rig to show up to site.

But first, IVZ needs to get that all important discovery…

Here is what we know so far:

So far, after two drill programs here is what IVZ has found so far:

As for the last step - sampling:

IVZ has managed to bring hydrocarbons up to surface from a secondary reservoir target (Pebbly Arkose).

Now, by drilling the Mukuyu-2 sidetrack well IVZ is looking to get the most optimal hole conditions so that a sample can be brought up to surface from the primary reservoir targets (Upper and Lower Angwa).

Here is an image of the cross section for the sidetrack well and IVZ’s two primary reservoir targets:

What’s next for IVZ?

Wireline logging and sampling of the Mukuyu-2 sidetrack well 🔄

IVZ started drilling the sidetrack well on the 27th of November and has previously said that from start to final results should take 21-28 days.

That means we should see the final results and know whether or not IVZ has made a discovery BEFORE Christmas.

What a discovery could mean for IVZ:

We previously put out a detailed note on what a discovery could mean for IVZ. Check out that note here: Just days away now… the IVZ result we have been waiting for