Sound Energy (LON:SOU) said its latest well on the Tendrara licence in Morocco is now just 10 metres from the target reservoir.
So far drilling has gone down to 2,623 metres, the third and final casing point where the crew has started to set and cement a seven-inch liner into the TAGI shale formation.
“The company will now proceed to drill the reservoir to the final target depth,” the firm said in a short stock exchange missive.
Work got underway in late August and the current operation, known as TE-7, is some 1.6 kilometres away from its last site.
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Once it hits its planned depth, the drill bit will be steered at an 88-degree angle into the TAGI reservoir to provide a horizontal drain of between 600 and 900 metres.
Sound will then test the well for 70 days to give a comprehensive read-out from TE-7.
Last week Sound said Tendrara had “multi Tcf” potential as it revealed plans for a third company-drilled well on the site.
In layman’s terms, any discovery that runs into the trillions of cubic feet (Tcf) of gas is an internationally significant discovery.
The third well, meanwhile, will be perhaps as far 30 kilometres north-east of the TE-6, Sound’s initial drill site. It will test whether the well reservoir extends beyond its current identified boundaries.
Given the success it has enjoyed in Morocco, the company in June exercised an option to buy a 55% stake in Meridja, the block next to Tendrara. The pair share the “same fundamental geology”.
Followers of Sound will know it also boasts a portfolio of production and development assets in Italy.
In the half-year update, it said it was counting down to drilling the Badile well, which could move the dial if successful.
The net present value of this one asset is put around €486mln, which may explain why Schlumberger, a partner in Morocco, opted to extend its agreement with Sound and help fund Badile’s development in return for a 20% interest.
Coming up too is drilling on the Sidi Moktar licence, which is near the Atlantic coast in Morocco.
"Tendrara was the first of our three strategic plays in our portfolio at present,” said Sound’s chief financial officer Mary Hood.
“We have Badile which is coming up very shortly and we also have Sidi Moktar.
“Each of those could potentially have three-digit potential for the share price."
The stock rose 4% to 95.3p in early afternoon trade and is up 429% in the year to date.
Broker Cantor Fitzgerald remains a‘buyer’up to 101p.
“The shares have continued their strong rally following the better than expected results at the company’s last well, but we believe the current valuation remains undemanding ahead of two transformational well results in Morocco and one significant well at its Badile prospect in Italy,”said analyst Sam Wahab.
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