Sound Energy PLC (LON:SOU) has found a success to report just days after disappointing exploration results put a dent in its valuation, revealing on Wednesday that gas production is on the horizon at the Sidi Moktar project in Morocco.
In a statement, Sound told investors that the re-entry into Sidi Moktar’s Koba-1 well has been successful – the well was re-entered, perforated and gas has been flared at surface.
WATCH: 'It's hard not to be encouraged' by upcoming production at Sidi Moktar for Sound Energy
The company reports that a 5 metre interval of the Argovian reservoir was perforated, and the well has been temporarily suspended ahead of a rigless well test.
It is intended that Koba-1 will be put into production rapidly following the well test programme. The well site is located close to existing infrastructure and gas demand, Sound added.
"We are delighted by this early success at the Kechoula discovery and look forward to both the extended well test and to unlocking the deeper, and much larger, pre-salt potential in the future,” said James Parsons.
“Our attention now turns back to our very significant position in Eastern Morocco where we are preparing for further near term drilling and seismic."
Sound Energy releases flare video of Koba-1 Well Test pic.twitter.com/LwlLYfLwYF
— Sound Energy (@soundenergyplc) July 5, 2017
Sound highlighted that it believes the Sidi Moktar has significant potential for deeper ‘pre-salt’ reservoirs, noting assessments by a previous operator which in 1998 saw the potential for up to 9 trillion cubic feet of in place gas in the TAGI and Paleozoic reservoirs.
The company intends to use seismic exploration data – it plans to reprocess existing 2D and capture new 3D seismic – to come to its own assessment of this potential.
Previously, Sound had also intended to deepen the Koba-1 well and immediately re-drill the Kamar-1 well to test Lower Liassic reservoirs, however, those plans are now changing due to poor quality cement bonding seen the Koba-1 well.
It is now anticipated that those reservoirs will be tested in future programmes along with the pre-salt potential, and as such the drill rig used to re-enter Koba-1 will now be released to the group’s other licences in Morocco.
Italy disappointment dented Sound’s share price
On Monday, Sound told investors that the gas discovered in the Badile exploration well is likely to be “sub-commercial”.
In a stock market statement, the company reported that the well was drilled down to a depth of 4,472 metres, with further significant gas shows observed along with water influx and losses of mud into what are believed to be fractures in the formation.
Sound’s analysis suggests that a 12 metre gas column was encountered in the Upper Conchodon reservoir, below 4,375 metres, beneath which is believed to be a gas/water transition zone, the company added.
In order to verify this analysis, the company will now run a limited logging programme and that is confirmed, then the well will be plugged and abandoned.
“The likely sub-commercial volumes at Badile are of course a disappointment,” said James Parsons, Sound Energy chief executive.
“Our focus now returns to our more material Eastern Moroccan position, where the seismic acquisition has begun and we are positioning for further drilling in Q4 of this year."
In early afternoon trading today, Sound Energy shares remained under pressure, down almost 8%, or 4.5p at 82.75p.
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