Sound Energy PLC (LON:SOU) told investors the Tendrara 6 well in Morocco has been confirmed as a significant gas discovery.
The well was drilled to a depth of 2,665 metres and encountered 28 metres of net gas pay.
Testing measured a stabilised gas flow rate, after stimulation, of 17mln cubic feet per day, which as Sound Energy highlights is significantly above the company’s expectations. It represents a highly commercial rate, it added.
"I am absolutely delighted to confirm a material commercial gas discovery at Tendrara and a resounding success at the first of our three strategic plays,” said James Parsons, Sound Energy chief executive.
“I believe Tendrara, Meridja and the Eastern Morocco TAGI play have the potential to be a material hydrocarbon province on a regional scale and therefore to transform both Sound Energy and the Moroccan gas industry.”
Sam Wahab, analyst at Cantor Fitzgerald, highlighted in a note that the well’s flow rate beats expectations by about seven times.
“We believe the company may have established a material hydrocarbon province on a global scale,” Wahab said.
Reflecting the apparent breakthrough success, Cantor this morning more than doubled its target price to 101p from 40p, and repeated a ‘buy’ recommendation.
Sound Energy also told investors that analysis of the Tendrara 6 well data alongside data from previous wells suggests a possibility that the Tendrara gas discovery comprises a significant gas column within a continuous extended structure.
Sound Energy believes the gas structure extends beyond the previously drilled TE-2 well, which is some 30 kilometres to the North East, and another new well will be drilled later this year to target the edge of the potential structure.
The next well, meanwhile, will be Tendrara-7. This will be a horizontal well and it will be located 1.3 kilometres from TE-6. By drilling through the reservoir horizontally the TE-7 well is expected to achieve a significantly higher well flow rate, assuming it is a success.
Drilling is expected to start for TE-7 this month, and an extending well test is planned once drilling is complete.
In the meantime the TE-6 well will be suspended until the TE-7 well results are confirmed; thereafter the company intends to apply for a production concession and begin preparations to build necessary infrastructure.