SDX Energy PLC (LON:SDX) has announced that the LMS-2 well, in Morocco, has encountered a gas reservoir “on prognosis”.
The well was drilled down to 1,190 metres and encountered a 10.6 metres of net gas reservoir at the base of the H9/Srafen formation, the company said.
Early analysis of the thermogenic composition indicates that, unlike other discoveries in the area, the LMS-2 gas is from a new and likely deeper source rock.
The company, in a statement, said it plans to test the well but only once coronavirus travel restrictions allow a testing crew to be deployed.
"We are encouraged with the initial results at LMS-2 in Morocco, however, we require this well to be perforated and tested before we can understand its potential,” said Mark Reid, SDX chief executive.
Elsewhere, in Egypt, drilling has now begun at the SD-12X well – the next well at the South Disouq project – which will be a test of the Sohbi prospect, estimated to have 33bn cubic feet of prospective gas resources.
If successful, it is anticipated that Sohbi could come online during 2021.
“Sohbi is an exciting well for the Company, targeting the same productive formation we are already producing from in Egypt and if successful, it has the potential to extend the current plateau production of 50 MMscfe/d to 2024,” Reid said.
He added: “The company remains well funded with US$11mln of cash as at 31 December 2019 and US$7.5mln of debt available in our EBRD credit facility.
“Furthermore, even at an oil price assumption of US$55/bbl, approximately 80% of 2020 and 90% of 2021 forecast cash flows are estimated to come from our fixed price gas businesses in Egypt and Morocco.
“We are positioned strongly to continue to weather the current fall in oil prices."