Sound Energy PLC (LON:SOU) Tuesday updated on progress on its Italian exploration well.
Badile, near Milan, has reached its first casing point at a measured depth of 545 metres in less than a week. The next casing stop is 1,400 metres, and the well will go down to a total depth of 4,445 metres.
To date the company has scored significant success at Tendrara, in Morocco, where it has discovered significant accumulations of potentially commercial gas.
However, Sound’s Italian assets were the foundation stone on which the company was built and it has two producing wells – although their output is modest.
Badile could move the dial for an independent assessment suggests the target could be host to around 178bn standard cubic feet of gas with a net present value of £400mln.
That figure is what’s called a ‘best case’, unrisked estimate. It sits at in the middle of the range with the ‘high case’ forecast being 670bn cubic feet and the ‘low case’ 46bn cubic feet.
Drilling and logging is expected to take 100 days and assuming gas is found, it will take a further 25 days for completion and testing.
Badile is one of two wells being drilled by Sound currently. The other is TE-8, a step-out on its Tendrara licence in Morocco.
On Friday investors were told TE-8, which is 12km from the last well, had just intercepted TAGI horizon.
If this horizon is a gas producer it will expand the lateral extent of the discovery.
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.
Oil companies analyst Malcom Graham Wood says it is an exciting time for Sound Energy.
“If my experience is anything to go by, they should have entered the reservoir at the weekend – unless something went wrong – and it won’t take long to sniff around and see if you’ve still got the gas and then, of course, you’ve got to start doing the tests and pressures, and everything else,” he told Proactive Investors.
“It is a pretty crucial time. We’re in exciting territory.
“Some people would say the [present] value of the stock needs to have TE-8 come in, which is probably fair [assessment], but, there’s no reason why it shouldn’t.”