Mosman Oil and Gas Ltd (AIM:MSMN) has told investors that it is progressing the Cinnabar well in Texas towards production after it encountered multiple potential production zones.
The company said it has completed wireline logging which confirmed zone seen previously in mudlogs. Some 97 feet of net play in the targeted Wilcox sands were estimated by Nutech Energy Alliance which Mosman described as an independent expert log analyst company.
The company said it now plans to test and bring the well into production, starting with the deepest zone identified in the well – Mosman noted that a nearby well had ‘sand at a similar depth’ which achieved an initial production rate of 196 barrels of oil per day – and dependent upon the rate in testing the zones will either be brought online or that zone may be suspended.
"We now look forward to getting this well on production,” said John Barr, Mosman chair, in a statement. “Our 75% working interest and the performance of nearby wells suggests production from Cinnabar can have a major impact on net production and, at current prices, that would mean a significant increase in both revenue and cashflow.
"The excellent drilling results to date confirms Mosman's technical work and geological model and mean this lease is ripe for the drilling of further development wells. This provides Mosman with an opportunity for staged organic growth."
Barr added: "Following the planned production flow tests, the results of this well will be included in the ongoing review and ranking of opportunities and will be key in the identification of additional development wells and to increase production on the lease as Mosman continues to progress its strategic objectives."
Mosman noted that it intends to update the current reserve report for the Cinnabar property in light of the well result and said that, encouragingly, "the geological model developed by Mosman was accurate in identifying a successful drilling location and it will be used to plan additional development wells on the Cinnabar lease.”