Sound Energy PLC (LON:SOU) has enjoyed further success in Morocco following the completion of its second gas well.
The company said it had encountered 28-metres of net pay, roughly in line with what it observed with its first well on the Tendrara licence, TE-6.
TE-7 was drilled horizontally to increase the surface area contact with the productive TAGI sandstone. This, it believes, will “significantly increase” the well flow rate.
Sound is now preparing for a 70-day flow test, which will “confirm production sustainability and to aid comprehensive field development planning”.
TE-7 was drilled to around 3,500 metres that included a 700-metre horizontal section.
The plan is now to drill what’s called an outpost well to test the extent of the gas in the TAGI sandstone. Work on this will begin next year.
Presentation reveals gas timeline
Earlier this week Sound revealed it expects the first commercial gas from the Tendrara property in Morocco in the first half of 2019.
A presentation uploaded to its website ‘road-maps’ development, starting with the horizontal well, TE-7, followed by TE-8, which will test the extent of the gas opportunity.
According to the updated literature the near-term potential of the asset could be anywhere up to 3-4 trillion cubic feet of gas.
Flow rates from Te-6, Sound’s first well on the Tendrara acreage, impressed both the management and the wider investment community.
Flow rates better than expected
Finance director Mary Hood in a recent Proactive Investors interview said: “Did the multi-TCF potential surprise us?
“No, it didn’t, but, what we were looking for was a commercial flow rate of say 3 to 3.5 million scuffs [standard cubic feet or ‘scf’] per day, and what we’ve actually got from that first well, the T6 well, is a flow rate of 17mln scuffs per day.”
She added: “It definitely surpassed our expectations.”
Tendrara could be a far larger regional play as it also has a 55% interest in the neighbouring Meridja permit.
Both are within 75 miles of a gas pipeline that plugs Algeria and Morocco into the main gas grid of Spain and Portugal, the presentation pointed out.
Sound Energy has been one of the in-form stocks of 2016 and is up 400% since the start of July on the back of its success in Morocco.
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Closing Thursday at 88p, brokers suggest it could break above £1 a share in the near-term.
Separately, a tweet from Sound last week provided photographic evidence that work may be about to get underway on another potentially needle-moving well, this time in Italy.
It showed ground-works are underway at Badile, within the Piedmont Lombard Basin, in the north of the country.
Badile has a bit of ‘nearology’ to it as it is next to the ENI-run Gaggiano oil field, which is host to around 400mln barrels of crude.
Italy offers a bonus
In fact ENI originally held the permit and shot some 460 line-kilometres of seismic before surrendering it 12 years ago.
Work in 2013 by the oil and gas reservoir evaluation specialist, ERC Equipoise, confirmed Badile as a potentially high-impact prospect.
It reckoned it was worth more than £400mln if hydrocarbons were uncovered in the quantities anticipated.
The figure was based on a gross prospective resource of 178bn standard cubic feet of (bscf) gas and 12mln barrels of gas condensate. That was a “mid-case” estimate. The high and the low cases were respectively 673bscf and 46bscf.