SDX Energy PLC (LON:SDX) told investors that its latest new well in Morocco, OYF-2 has successfully encountered commercial quantities of gas, in excess of pre-drill estimates.
The OYF-2 well was drilled down to a depth of 1,210 metres. It encountered gas in both the upper and lower Guebbas formations. Both reservoir targets were found to be thicker and of a better quality than expected, SDX revealed in a statement on Tuesday.
The company noted that the new discovery confirms that its core productive area extends to the north.
SDX estimates some 1.3bn to 1.9bn cubic feet of recoverable gas in the horizons encountered in OYF-2, and said the result also opens up some 0.5bn to 1.0bn cubic feet of additional prospective resources in the ‘western compartment’ of the lower Guebbas.
Well testing is now due to take place in February and, subject to results, the well will be tied-in to existing production infrastructure at an estimated cost of around US$2mln (net to SDX).
Drilling now moves on to the BMK-1 well location, about 11 kilometres further north from OYF-2.
Beyond BMK, the company plans one more close-to-infrastructure well along with two potential “play opener” wells in the Lalla Mimouna licence area. These wells are expected in March.
Drilling in Egypt
In Egypt, meanwhile, SDX noted that it is presently preparing to drill two new wells in the South Disouq project area, following up on four South Disouq discoveries to date.
The first will be Salah which is due to spud in mid-to-late February and will focus on a 71bn cubic feet target, while the second will be Sobhi which is due in late-April-to-early-May and will test a 33bn cubic feet target.
An appraisal/development well is slated for the Rabul area of the West Garib field, and, if successful, it will add some 200 to 300 barrels of daily production.
SDX chief executive Mark Reid, in a statement, said: “We have a particularly busy year ahead with the drill bit, giving us the opportunity to increase significantly the company's reserves life."
He noted: “OYF-2 in Morocco is a very positive start, a discovery which is larger than pre drill expectations, and confirmation that our core productive area extends to the north. With the planned follow on development well, we now have the potential to increase our total reserves in Morocco to approximately three to four years of customer demand with our gas being sold under five and ten year fixed priced contracts at an average gas price of circa US$11/mcf.”
“With the imminent commencement of drilling campaigns in South Disouq and West Gharib in Egypt, together with the ongoing drilling campaign in Morocco, we have a very busy period of activity ahead of us with three rigs drilling simultaneously,” Reid added.
Elsewhere, SP Angel analyst Sam Wahab in a note said: “Another positive update from SDX confirming that the OYF-2 well encountered a gas structure larger than pre-drill expectations.”