Oil & Gas Corporate News
Desire Petroleum (LON:DES) (BUY, £2.00) (DES, 109.75p, ? (17.33%)) advised that the 14/15-1 well on the Rachel prospect has reached a total depth of 2,877m. Initial wireline logging shows that no hydrocarbons have been found. However a substantial thickness of sandstone was encountered in the upper part of the target zone, comprising 103m of gross sandstone of which 81m is net reservoir with an average porosity of 23%. The Rachel well has provided much new valuable data on the distribution of the reservoir targets within the Eastern Flank play and in particular the calibration of the 3D seismic data for sandstone prediction. The understanding of this play type is rapidly evolving but one of the biggest remaining uncertainties relates to the oil charging mechanism from the mature oil source rock to the fan sandstones. Based on the latest information from this well, potential sandstones have now been identified downdip from the existing location, closer to the mature oil source rock, significantly reducing the oil charge risk. As a result the well will be sidetracked to this location to evaluate the prospectivity. The sidetrack will commence when the present logging operations are complete. The total depth of the sidetrack is planned to be 3,418m measured depth with an offset of circa 1.2km from the total depth of the original vertical well. The sidetrack will be designated 14/15-1Z and is expected to take 20 days and the Company will make a further announcement upon completion of this sidetrack. The Rachel well is the first in a likely four well drilling campaign operated by Desire. Following the 14/15-1Z sidetrack it is intended to move the rig to the next location 25/5-1 on the Dawn/Jacinta prospect in the Desire 100% Tranche I licence.
Comment: A disappointing outcome for Desire although good reservoir characteristics have been found in the target formation. Access to charge seems to be the issue more than timing and a sidetrack closer to the kitchen sounds like the right course of action. We are not writing off Rachel at this stage and maintain our rating and price target.
Max Petroleum (LON:MXP) (BUY, £0.50) (MXP, 11.75p, ? (2.08%)) announced that it has commenced drilling the UTS-1 exploration well on the Uytas prospect in Block A, the sixth of 13…
