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City broker examines latest Sound Energy well result

Published: 11:00 28 Mar 2017 BST

oil drilling
The TE-8 well was a material step out, of some 12 kms

The outcome of Sound Energy PLC’s (LON:SOU) latest well is described as a “mitigated success” by WH Ireland analyst Brendan Long.

Sound Energy confirmed today confirmed the presence of gas in two sequences, Westphalian sands (from a depth of 2,762 metres) and the TAGI reservoir sands (from 2,642 metres).

The TE-8 well was a material step out, some 12 kilometres, from the main Tendrara operations to date. So the result means that Sound has confirmed a significant extension of the Tendrara field.

Sound explained, however, that the encountered TAGI reservoir was not of the same high quality as recent wells - the reservoir is described as ‘tight’ and would require mechanical stimulation for production.

Crucially, Sound said the presence of gas in TAGI reservoirs is consistent with a very significant single gas column across Tendrara and Meridija with a continuous extended structure.

TE-8 also encountered gas in a sequence of Westphalian sands, which is Morocco's primary gas play.

“The primary objective of the well (TAGI appraisal) appears to have found reservoir that is ‘likely tight’ and ‘still under evaluation’, which we interpret to mean tighter than anticipated. However, we understand that deposit was from a fluvial (somewhat variable) setting,” WH Ireland analyst Brendan Long said.

“We focus on the total volumetric scale and believe vertical well results will necessarily vary from well to well in this geological context. Data is still preliminary. The company indicated they may stimulate the well or sidetrack it.”

Long added: “The secondary target at the TE-8 well sounds like a tight reservoir being qualified as ‘believed to to permeable and likely able to be produced with mechanical stimulation’, so a bit of a mitigated success bearing in mind the intent of any such well is to gather detailed data to assess this with a bit more granularity and analysis.”

The analyst believes that plans for a sidetrack of the TE-8 well are “likely conditional on the clear success” of the TAGI horizon in the well, and he says that “may be a lot to ask for”.

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