Two small Houston-based firms each have gigantic projects under way in Africa.

Offshore the east side of the continent, on the island nation of Madagascar, privately held Madagascar Oil is pushing forward on projects that range from light-oil exploration to bitumen mining and processing. The company, which just relocated its headquarters to Houston, has arranged an $85-million capital facility with several institutions, led by Credit Suisse.

Madagascar Oil's major assets are its 100% interests in two large onshore blocks in the Morondava Basin.

Tsimiroro Block contains a heavy-oil deposit that should be amenable to thermal recovery via cyclic steam injection. This block, on which 61 wells have already been drilled, covers 6,670 square kilometers. It holds a billion barrels of 14- to 16-degree oil in place, according to an appraisal done by Netherland Sewell & Associates.

This year, Madagascar Oil plans to initiate a huff-and-puff pilot at Tsimiroro, with the goal of reaching first production late this year, says Alex Archila, chief executive. Simultaneously, the company will continue appraisal work by coring each of nine oil-bearing structures present on the block.

Notwithstanding that considerable project, a prize that could potentially be far more significant lies in the company's 7,000-square-kilometer Bemolanga Block. This license holds 16.6 billion barrels of in-place bitumen, one of the world's largest undeveloped caches of such resources. At present, Madagascar Oil is working to strike a deal with a partner to develop this asset.

"In our deposit, the sweet spots have 10 meters of overburden, significantly less than the 30 to 60 meters in Canada's Athabasca tar sands," says Archila. Bemolanga's bitumen resources also carry low concentrations of metal and sulfur, which is quite desirable for refining.

One challenge is that Bemolanga's percentage of bitumen by weight is 6% to 7%, versus contents of 10% to 13% in Alberta; another is the total lack of infrastructure in Madagascar. "We will have to offset these issues with potentially lower operating costs due to our thinner overburden, and the higher quality of our crude."

In addition, the company has five exploration licenses that could be prospective for light oil and gas accumulations. Four it holds 100%; the fifth is a 50/50 venture with U.K.-based explorer Tullow Oil. "A number of wells have been drilled in these blocks by a series of operators," says Archila. "We plan to do regional, seismic and geochemical work to start understanding them."

Across the continent, offshore the West African nation of Guinea, public company Hyperdyamics Corp. holds a license that covers 80,000 square kilometers. Some 10,000 kilometers of vintage 2-D data and 5,000 kilometers of current 2-D data (acquired by Hyperdynamics) overlay the block.

In September 2006, Hyperdynamics signed a production-sharing contract with the Guinean government that imposes a 10% royalty and a split of profit oil, determined by daily production rates after 75% of upfront costs are recovered.

"We have the largest concession in the hottest region in the world for oil and gas exploration," says Kent Watts, Hyperdynamics chairman and chief executive. Water depths range from shallow to ultradeep. The eastern half features fairly shallow water less than 100 meters deep, and depths in the middle portion are around 200 meters.

Hyperdynamics started working in the area in 2002 when oil prices were quite low. It initially shot a 1,000-kilometer regional grid, and later added another 4,000 kilometers.

The company supplemented its seismic data with an independent geophysical study by Petroleum Geo-Services, which indicated that large, hydrocarbon-bearing structures were likely present within the concession. Hyperdynamics also has satellite and core studies, and has integrated all of the geological and well-log data available in the concession with the seismic data. Furthermore, driller GlobalSantaFe has completed a logistical study that mapped out support options for a drilling program offshore Guinea.

"We've pulled all the information we have into a package, and we're now giving presentations and inviting oil companies to join a data-study group," says Watts. Interested companies will receive a special license and be allowed to do proprietary work on the data.

"We're opening up the opportunity to potential partners to join us in this exploration challenge."