Pantheon Resources Plc (LON:PANR) told investors on Tuesday drilling had begun on a third well on its acreage in Polk County, Texas.
The VOBM3 well will be sunk to a depth of 14,250 feet into the Eagle Ford sandstone over 45-50 days.
Two earlier wells in the area encountered significant oil and gas (mainly gas).
But both had issues. The first - the VOS1 well - saw fracking completed and delivered a flow rate of around 920 barrels of oil equivalent a year, comprising 5,500 mcf of gas.
The second, which was to be a horizontal well, had to be abandoned after the sandstone proved too resilient, and there was a series of equipment failures.
This prompted the firm to return to drilling conventional vertical wells.
The failure of the second horizontal led to a brutal mark-down of shares in Pantheon last week, but analysts said the sell-off had been overdone.
Reinstating a ‘buy’ stance and 193p price target, WH Ireland analyst Brendon Long said shares had been ‘oversold’.
“Did we get ahead of ourselves in our valuation? Yes, because we assumed that the company would not run into drilling or operational challenges.
“We have now included an 85% chance of success for all drilling operations and believe that with statistical history there is scope to move that upwards."
The pros and cons of so-called fracking to recover hydrocarbons from the shale rock have been well documented in recent years.
It involves drilling a well and pumping down a water and chemical mixture at high pressure to release gas. It can be done vertically but is much more common horizontally. Environmental campaigners believe the technique is damaging, while others see it as an economic way to get to untapped resources.
Pantheon shares today she 3.67% to 85.25p.