Cobalt International Energy Inc. (CIE), a deep-water oil explorer whose biggest investors include Goldman Sachs Group Inc. (GS), climbed to a record after test results at a discovery off the coast of Angola exceeded the company’s expectations.
Cobalt surged 33 percent to $31.68 in New York, its highest close since the company first sold shares to the public in December 2009.
Work at the Cameia-1 well confirmed a 1,180-foot (360- meter) oil column, the company said in a statement. Cobalt and its partners will now begin to appraise the well to evaluate the discovery’s size, according to the statement.
“The results have exceeded our pre-drill expectations and have increased our confidence in our entire West Africa pre-salt exploration inventory,” Joseph Bryant, chairman and chief executive officer of Houston-based Cobalt, said in the statement.
Cobalt said on Jan. 10 its Cameia-1 well in the Kwanza basin found a “high-quality” oil reservoir. BP Plc (BP/), ConocoPhillips (COP) and Total SA are among oil producers that won licenses in Angola’s pre-salt areas largely running from the equator south to the Tropic of Capricorn.
Energy companies are exploring possible oil reservoirs below a layer of salt more than two miles beneath the seabed off Africa’s coast. That follows success off Brazil on the South American side of the Atlantic in finding some of the largest fields of the last decade under the same mineral.
The Cameia well may have the potential to produce more than 20,000 barrels of oil a day, according to Cobalt, which has wells in the Gulf of Mexico and West Africa. The company said it plans to start drilling at the Cameia-2 well this month, work that’s expected to take 100 to 120 days.
“This basically confirms pre-salt hydrocarbons within this trend and opens up opportunity on the other multiple prospects that Cobalt holds in the area, including Gabon,” Scott Hanold, an analyst at RBC Capital Markets in Minneapolis, said in a telephone interview today.
The Cameia prospect area may have close to 2.5 billion barrels gross, based on preliminary results, said Hanold, who has a “sector perform” rating on Cobalt shares and doesn’t own any. The 50 percent stock price climb by the company earlier today implied a possible 10 billion barrels gross in areas offshore West Africa where Cobalt has properties, he said.
“We’re talking about something that could rival all the stuff that’s happening in Brazil,” Hanold said.
It may be several years before production is under way off Angola, Cobalt said on a conference call today. Cobalt has a 40 percent stake in Cameia-1 and the block where it was drilled.
Goldman Sachs and private-equity firm Riverstone Holdings LLC each hold 19 percent stakes in Cobalt, according to data compiled by Bloomberg.