US Oil & Gas (LON:USOP) has been approved to drill a second well on the Hot Creek Valley property in Nevada.
Eblana 2 will follow up the group’s closely followed Eblana discovery well.
“The award of the company's second permit is an important step forward in our programme to take the Hot Creek Valley discovery to the next stage,” chief executive Brian McDonnnell said.
“Preparations for additional survey activities are well underway.
“Our purpose remains to prove up the asset in the most efficient way possible and we believe significant progress is being made by the company on all fronts.”
In May, findings from a testing programme on the Eblana 1 well confirmed an oil discovery and subsequent analysis led to a significant uplift in reserves.
While the tests fell short of confirming commercial oil flows, USOP remains confident the project remains on the right track.
Eblana 1 encountered oil shows at several levels and identified a total of nine potentially productive zones.
An economic model, based on assumptions of Forest Garb & Associates, the author of USOP’s most recent competent person's report, envisages a 50-well development scenario with average production of 350 barrels per day (bpd) per well, which equates to gross production of 17,500 bpd.
Under this scenario the capital cost of the project is estimated at US$206mln, and the model points to an estimated ‘present value’ of US$587mln.