THE only underlying question aching every investor's pocket is whether Zimbabwe has  oil. A bit to unpack  here, but  it's worth  taking  the  time  to  look  at it.  Last week  on  November 3, Invictus  got  thrust  into a  trading  halt  following  a  ‘Please  Explain’ from the ASX  over  price  and volume ‘issues’, to which  Invictus  suggested  that  the  market  “may be  speculating on the likelihood  of  success or failure of  drilling targets    in  the  Mukuyu-1 well”.

Fast forward to November 10 (time of reporting), Invictus has  revealed that the  drilling has been successful, with “elevated  mud gas peaks (up to 65 times above   background  gas baseline) have been observed while drilling through a depth of  3,070 mMD with marked increases from  Cl  to  CS  compounds (methane, ethane, propane, butanes and pentanes)”.

Managing director Scott  Macmillan says  the early results are “an exciting development validating our subsurface model”. 

However, he exercised caution in his   addresses to investors.

 At the Invictus Energy  investor briefing two weeks ago, he said “under ASX (Australian  Securities  Exchange) listing rules and under SPE (Society of Petroleum Engineers) rules, in order  to declare a discovery, you have to obtain  a fluid sample  back  to surface, which is a very  important criterion in order to declare a discovery”. 

 He further added, “a lot of other companies would have been  more aggressive and  declared  this  a discovery, but  we play   by  the  rules and won't push  this further than   we are allowed  to.”  

So far, Invictus Energy (IVZ) has confirmed a “working hydrocarbon system”   within its Mukuyu-1 well  amid  equipment   trouble.  

Drilling of the well,  which  lies within    the company's 80-per-cent-owned licence  in  the  Caborra  Bassa Basin   of   Zimbabwe,  has  reached  a  measured depth of   3086 metres.  

The  journey to this depth,  however,  has  been  slower  than  anticipated due to “challenging  conditions” in the Pebbly  Arkose,  where  Invictus  said several loss zones were encountered  that  required remedial action to stabilise drilling fluid loss.  

Despite this, elevated gas shows and resistivity were displayed in the Pebbly Arkose and the Forest formation. Drilling   conditions improved in the Upper Angwa formation primary target, where elevated  mud gas peaks were observed up to 65 times above background levels.

An initial 100-per-cent fluorescence was also observed in a downhole cutting  sample of sandstone  from 3070  metres, which   the company said indicated the presence   of   condensate or light  oil. 

However, in the Upper  Angwa formation,  the stator in the downhole drilling  motor failed and is  now  being changed   out   before drilling can continue. 

Notwithstanding the  drilling difficulties,  thecompany's managing director Scott  Macmillan,  said the early indications in  the  Upper Angwa  were ‘highly   encouraging’ and proved a conventional working hydrocarbon system  existed  in  the  Caborra Bassa Basin.

The  share  price  of  Invictus  Energy  has  been  on a  roller  coaster  since the  beginning   of  the  year and speculation is swinging ahead of a major announcement   post-completion  of  current  drilling  exploits  on  the  exploration  wells  in  Zimbabwe.

 The  Australian  Stock  Exchange  listed Invictus  Energy  is  the  80%  owner  and  operator of the  Caborra Bassa  Project  located  in  Muzarabani, which is in Mashonaland  Central at the border with Mozambique. 

The company's  share price  has  moved  up by  115%  since the beginning of  the  year from AUD0.13 to AUD0.28 as at 10 November. However, between May and June, the  counter  fell by 30% easing from AUD0.28  to about  AUD0.13.

The  Caborra Bassa project encompasses     the Mukuyu prospect, with a prospective  resource estimate  of 20 trillion cubic  feet  and  845 million barrels of conventional   gas-condensate   target  or about 4.3 million barrels of oil equivalent. The Mukuyu   prospect, which will  cost about US$16 million  in  exploration, is mapped on seismic  data with  over  200km/s  under   closure and contains multiple  prospective   horizons.

Invictus  completed  the acquisition  of  840 km of high-resolution 2D  seismic  data   in   November 2021 (CB21 Seismic Survey  Documentary), which revealed new targets within the Mukuyu prospect. Drilling  of the Mukuyu-1 exploration commenced in September 2022, the first of a 2 well high impact basin opening drilling campaign.   Bao bab-1  will  follow  to  test  the  high  potential  basin margin   play   which   displays similarities to the East Africa Rift “String  of  Pearls”  play

It  is  clear  from  the  carnage  which  followed  that a good fraction  of the shareholders  preferred spreading  the  risk  through  debt  other  than  capital calls. To   some,  the decision could  have  been interpreted as  a lack of buy-in from the  outside, maybe a pointer  towards  elevated  project  risk. Interestingly, the  latest announcement as at November 10, has again  sparked interest  in the counter, a sign  of high speculation  on  the  project. On Thursday morning, the energy  explorer's shares surged as much as 150 higher   to  26.5 cents,  under one  session following   a  more  encouraging update  on  the  drilling  process.

Having   peaked at AUD0.31 in September the stock went on to plunge to  level  below its year opening  at AUD0.11  at  the  beginning of November as Mukuyu  explorations were underway.

Having peaked at AUD0.31  in September  the stock went on to plunge to levels  below  its year opening at AUD0.11 at  the beginning of November  as Mukuyu explorations   were underway. A closer look at the  share   price  movements shows a direct relation to project developments. Largely the movement  reflects speculations on the  ongoing  drilling  developments   on  Mukuyu-1. The update posted on the October 26 was lukewarmly expressing complications in the drilling and  sample  analysis  process.

In the October  26 update, the company  said, “Following the completion of the   first   suite  of wireline  logging, a zone of interest  in  the  secondary  objective  in the  200  Horizon  target coincident with  observed   seismic amplitude  anomalies was interpreted to contain  potential hydrocarbons based on  significantly elevated  resistivity (two orders of  magnitude  above  baseline)  across  a 10-15m interval   from approximately 785m MD and separation between  shallow, medium and deep resistivity readings.

Further  analysis of this zone was interpreted to have tight reservoir properties with complex mineralogy and a decision   was made  to forgo running the formation    pressure/sampling wireline tool without the appropriate sampling probe and packers  available.

The decision was made  with  careful consideration of several factors,  including the abilit  to obtain valid pressure  measurements  and  fluid samples in tight reservoir and significantly overbalanced hole conditions  with  the increased  risk  of tool  sticking and  potential  loss  due to  the  heavy mud  weight used  in this hole  section.

While  sounding  hopeful, the  statement  cited unforeseen complications that some investors interpreted as potentially adverse  to the prospects of a positive outcome for the exploration further propelling the  plunge in  share  price  which was already  underway.

The  share  price  carnage  began  in  earnest   at  the end  of  August  following  a temporary  trading  suspension   on  the  ASX   at  the  request   of  Invictus, citing  a  pending  major  announcement.

What lies ahead?

MD, Scott McMillan said  the  findings was   an exciting   development  that validated   the   company's  subsurface   model.  

“We   still   have  several hundred   metres   of  drilling   through our  primary targets   with   additional  potential,  which  will   be followed by a comprehensive  wireline logging programme to evaluate results, with the aim of confirming   the   presence   of  moveable  hydrocarbons  in  multiple  zones,”Macmillan   said.

Logging  while  drilling  (LWD)  analysis  has  identified  further  shallower  zones  of interest within the Upper  Angwa,  with  elevated  mud  gas readings and LWD resistivity being observed.

Additional potential   zones  of interest  in  the  Pebbly   Arkose and Forest formations also display elevated LWD resistivity. This wireline  logging  program will take place once  Invictus'   drilling  reaches   a  total depth  of 3500  metres,  and  it  will  allow  the  company  to  identify  any  potential  hydrocarbon   pay.

“The   decision   was  made   with   careful   consideration  of  several  factors,   including   the  ability   to obtain    valid   pressure    measurements    and   fluid samples  in  tight  reservoir   and  significantly   over• balanced   hole  conditions   with  the  increased   risk of   tool   sticking   and   potential   loss   due   to   the heavy   mud   weight   used   in   this   hole   section”, Invictus  said

It  means  that  Invictus  is now  at  a point  to identify what  is inside  the  rocks  as it prepares  to reach the  target   points   within   the   hole.

The   explorer said  it  would   carry   out  more   research   and  use the  acquired   data  to  examine   alternative   sites  to test  this  target  further   in  a  crestal   location   and away  from  the  fault  plane  where  improved  reservoir  quality  may  be  present.

There  are  likely  to be  further  swings  in  the  share price until the drilling and sampling process is completed.

The  counter's  future  prospects  clearly lie   in  the   outcome   of  the   exploration   across   a number  of  targeted   areas  within  the  broad  basin whose  surface  area  has  been  expanded   on  addi tional  claims  acquired.   Share  price   stability   will only kick in once production commences if the exploration   succeeds   and   matrices   such   as  production  run  rate,  gas  quality,  global  demand  etcet era,   are  determined.

Gwenzi is a financial analyst and MD of Equity Axis, a financial media firm offering business intelligence, economic and equity research. — respect@equityaxis.net