Sound Energy PLC’s (LON:SOU) pressure update is “inherently good news”, so says WH Ireland analyst Brendan Long.
In a statement on Wednesday, Sound said it expects to deploy a field development at the Tendrara project using regularly spaced horizontal wells, of similar design to the recently drilled TE-7 well.
READ: Sound Energy confirms Tendrara development concept is intact
The company gave investors details of new analysis of theTE-7 well, onshore Morocco, based on newly retrieved pressure build-up data.
TE-7 was shut-in back in January following a successful 56-day flow test - which produced around 1bn cubic feet of gas – and the company has now retrieved downhole pressure gauges from the well which provide new detailed information.
The most recent pressure reading shows what Sound described as a “very strong” pressure recovery to date – it was recorded as 393.8 bar, compared to a reading of 140 bar immediately after testing and 422 bar original pressure reading.
Sound noted that the Tendrara reservoirs are low permeability, and as such highlighted that pressure build up is still ongoing and it estimates that pressure stabilisation will take a further six to eight months.
Based on reservoir simulations, the company said that once the reservoir pressure is fully stabilised it is estimated that the TE-8 will address some 40bn cubic feet of gas for production.
“This is consistent with the company's preliminary volume estimates announced on 23 May 2017 and enables the company to confirm a field development concept with regular spacing of sub horizontal stimulated wells, similar in design to TE-7,” Sound said.
Analyst encouraged by pressure update
WH Ireland’s Brendan Long, said: “this is an excellent pressure response and reflects the productivity of the well. It suggests that after producing for 57 days the well is still in ‘transient’ or ‘non-stable flow’ or in other terms that downhole flowing tubing pressure was still falling.
“The response is inconsistent with a stabilised flow from a permeability reservoir, which Tendrara is.
“It means that the well is highly productive, but that predicting a decline curve, drainage area and connected gas volumes is tricky (theoretically not yet possible).
The analyst added: “However, let’s not fish out negativity (uncertainty really) from what is inherently good news, the well is almost like new after 57 days, whereas typically those early days are the most tiring in terms of pressure depletion around the wellbore.
“We need a longer test and it is not possible to even guess how long the test needs to be. Typically such wells decline quickly until they stabilise.”