The government has signed a Production Sharing Agreement (PSA) and issued a license for Petroleum Exploration, Development and Production for the Kanywataba Contract Area with Australian company, Armour Energy Limited (AEL).

Located at the southern end of Lake Albert, the Kanywataba block has seen nearly 115 wells drilled so far. The number of wells encountering hydrocarbons in the block is 101 which Armour says had resulted in a success rate of 88% on economic discoveries.

The discoveries in the Albertine Graben basin have yielded nearly 6.5 billion barrels of oil initially in place with estimated recovery being 1.5 billion barrels. The oil in the basin has been proven to be light to medium gravity in the 30-35API range with associated wet and dry gas.

Armour estimates low, best and high unrisked prospective oil resource in the range of 646-969 million barrels (MMBBLS) of oil in place across seven prospects. Each of the prospects has stacked reserves, added the Australia-based exploration and production firm.

The main resource risk of the Ugandan oil project as per Armour is possible loss of hydrocarbon charge based on which the Australian firm considers prospects 2 and 3 to be the most prospective targets of its exploration campaign.

Subject to consent of the Ugandan government, Armour will form a joint venture with Copper ores company DGR Global for the oil project in the Kanywataba Block. Armour will hold a stake of 16.82% while DGR Global, which is also its majority shareholder, will hold the remainder stake of 83.18%.

The exploration license of the Kanywataba block awarded to Armour will be for two years from the date of its issue. Based on completion of the work program during the two-year period, the license can be renewed for two more years.

In another development, Armour in Australia has commenced the first phase of gas production from the Kincora Gas Plant in the Bowen-Surat Basin, Queensland through the re-commissioning of its dry gas circuit.