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Roxi Petroleum eyes March well test


Roxi Petroleum (LON:RXP) is aiming to start testing of the A5 deep discovery well in March, so long as it can fish out an obstruction in the well.

The company told investors this morning that it has now recovered the major part of coil tubing that was previously stuck in the well; however, some 50 metres of coil remains.

It plans to remove the obstruction over the remainder of February and aims to start a 30 day testing programme next month.

Alternatively, if the obstruction can’t be cleared, Roxi says it would as a last resort drill a side-track.

Roxi also announced it plans to start drilling the follow-up A6 well once the stuck pipe has been removed from A5.

A6 will target the same deep oil bearing formation and though it will be located some 1,800 from the A5 location.  Roxi expects to achieve a significantly cheaper contractor for the A6 well, though it says a drill contract has yet to be finalised.

Elsewhere, 8kms from A5, the 801 deep well has reached 2,978 metres without incident and is expected to reach target depth by mid-April.

The well has a total target depth of 4,950 metres, though operation will pause at 3,550 metres before drilling through more difficult sections, comprising a 300 metre salt layer and a subsequent 800 metre high pressure section. 801 is being drilled by Sinopec at a fixed cost of US$11mln.

“The lessons learned at Deep Well A5 should help us greatly now we approach the most difficult phase of the well," said Roxi chairman Clive Carver.

Brendan D’Souza, analyst at WH Ireland, repeated a ‘buy’ recommendation and a 28p price target and said the next few months could be transformational for the company.

“After what has been a quiet winter on the operational front, spring is expected to be highly eventful for Roxi,” the analyst said in a note.

He adds: “Additionally lower expected drilling costs, resulting from a sharp decline in oil prices, is the cherry on the cake.”

Roxi owns a 58.41% interest in the BNG contract area, which hosts the deep discovery.

Quick facts: Caspian Sunrise Plc

Price: 3.875 GBX

Market: AIM
Market Cap: £72.95 m

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