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Premier Oil up as it reveals “excellent” appraisal well result at Zama discovery

"This is an excellent start to the Block 7 Zama appraisal programme in Mexico,” said Tony Durrant
oil and gas operations
Zama-2 encountered some 152 metres of net pay

Premier Oil PLC (LON:PMO) shares rose on Thursday as the explorer revealed what were deemed to be excellent appraisal well results from its large Zama oil discovery offshore Mexico.

The Zama-2 appraisal well encountered the target reservoir on prognosis, measuring some 152 metres of net pay above the oil-water contact point. The result was positive and expected.

At the same time, the ratio of net pay versus gross pay was 73% which is higher than at Zama-1 and the result was better than pre-drill expectations.

READ: Premier falls on rumours of US$1.5bn acquisition and ‘cash call’

Premier confirmed that the quality of the encountered oil was similar to Zama-1, as predicted, and operations will now continue with side-track drilling before a flow testing operation.

It added that the programme is presently ahead of schedule and under budget.

"This is an excellent start to the Block 7 Zama appraisal programme in Mexico,” said Tony Durrant, Premier chief executive.

“It enhances our interpretation of the large Zama discovery and increases our confidence in our resource estimates. We now look forward to the results of the drill stem test of the Zama-2 sidetrack."

In a note to clients, analysts at SPAngel commented: “The update from the Company on its recent Zama appraisal well is a feather in the cap for the technical team, as not only was the well drilled on time and under budget, but that it was able to verify the predrilled expectations.”

They added: “Whilst at this stage this is largely meaningless, it demonstrates that the Company has a clear understanding of the asset, which is therefore likely to result in a better designed development programme.”

In late morning trading, Premier Oil shares were 4.4% higher at 71.25p.

 -- Adds analyst comment, share price --

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