Sound Energy PLC (LON:SOU) is making rapid progress with its third well on the on the Tendrara licence in Morocco.
TE-8 has now reached the second casing point in the Triassic Basalt at 2,076 metres just 10 days after drilling began. The third casing point sits at a measured depth of 2,640 metres.
Assuming gas is encountered in the main well bore, a further 30-day side-track will be drilled to prove a potentially deeper gas contact 900 metres to the north-west, Sound said.
TE-8 is around 12 kilometres from the last successful hole and is what’s called a step out well because it will test the lateral extent of gas that has been discovered in the TAGI reservoir.
Several share price catalysts are coming up for Sound Energy - Capital Network
Whatever comes in the next two months, the firm has already enjoyed considerable success at Tendrara.
Results from TE-7 were revealed on January 19 with the company telling investors that over a 56 day period of continuous flow the well has yielded just under 1bn cubic feet of gas.
That figure is made all the more impressive given that the gas flow was constrained in test conditions, at a maximum of 40% drawdown, in order to protect the integrity of the well completion to date.
No formation water was produced during testing – as the company had expected – and there were no indications of barriers.
As such Sound said that the result had confirmed a “significant connected volume” of gas is present at Tendrara, and it would now monitor pressure across past wells to confirm the physical connectivity of the reservoir.
The programme on TE-8 is scheduled to last 40-50 days, according to the City research firm Capital Networks.
It is one of a number of value-accretive catalysts expected in 2017, said Capital’s analyst, Lionel Therond.
“We believe the stock provides investors the opportunity to gain exposure to one of the few growth story in the sector, with the potential to benefit from substantial appreciation as assets get de-risked and material resources are added,” he said in a note.
“However, we would caution that any disappointing drilling results might leave the stock rather exposed given recent momentum and the lack of certified reserves, although we recognise that the optionality in the portfolio would remain substantial.”