Good morning from Trinidad, flying back today after a superb week with the full Touchstone team.
Oil prices have rallied a little, worth looking at the excellent report from Wood Mack on China. Also note that natural gas prices both in the US and Europe are creeping up, the latter due to unexpected outages from Norway.
Apart from companies below my comment yesterday about Reuters reporting that Harbour Energy are about to exit North Sea licences was picked up by Energy Voice, I can’t say what they said as I’m not allowed in, and to think they used to take the blog! And also noting that Sintana has with Galp spudded the Mopana 1-A well in the heart of Namibia’s Orange Basin .
Touchstone Exploration
Yesterday was a wipe-up day catching up with members of the Touchstone team before everybody scattered homeward bound today. It has been a really good week and whilst my reports have been brief due to time constraints I will enjoy writing more about the company in coming weeks.
Touchstone has very good operations down here, both in gas which it is known for but also in oil for which it is less famed but which is a key part of the equation for the company.
Having met pretty much everyone in the team over here I can say that they are fantastic all the way through and up to the senior team both here and from Calgary. Overall they make a very good team, work together and cover all the bases with diligence, hard work and expertise. It’s been a great week and there is much good to come from Touchstone.
Petro Matad
Petro Matad has announced the start of oil production from its Heron-1 discovery well in its Block XX Production Sharing Contract area in eastern Mongolia.
Commissioning activities on the Heron-1 well pad have been completed and the beam pump was started on 24 October. Clean up of well stimulation fluids is expected to take several days after which various flow rate tests will be performed. The first load of produced fluid has successfully been transported to the neighbouring Block XIX facilities. The startup ceremony went ahead on 25 October and the Company was honoured with the presence of Mr. S. Javkhlanbaatar, State Secretary of the Ministry of Industry and Mineral Resources, Mr. L. Bayarmandal, Chairman of the Mineral Resources and Petroleum Authority of Mongolia and many other senior government officials.
Further operational updates will be provided in due course.
Continuing the good news from MATD where with the beam pump starting will lead to clean up and flow testing after which we can get the calculator out to see how much moolah the company will be making. Really good to see so many grand fromages pitching up for the start up ceremony…
Prospex Energy
Prospex has announced that the Viura-1B development well which is being drilled by HEYCO Energy Iberia S.L. (“HEI”) has successfully reached its revised targeted Total Depth. TD of 4,500 metres which is ≈4,100 meters True Vertical Depth (“TVD”), was reached on 21 October 2024 in the 6-inch hole section of the bottom 450 metres of the well. Drilling the Viura-1B well deeper to evaluate the Utrillas-B formation appears to have been a highly successful commercial decision, with good gas shows and several potential reservoir formations encountered in this previously undrilled section and with valuable new data acquired.
The Viura gas field is currently back on production with gas being flowed from the existing producing well Viura-1 ST3. Production revenues from the Viura-1B well expected in November 2024.
Prospex owns 7.2365% of the Viura field through its ownership of 7.5% of HEI. Prospex will receive 14.473% of the production income from the Viura gas field until payback of its initial capital investment from the acquisition in August 2024.
Overview
· Drilling of the Viura-1B well commenced on 22 June 2024. The revised TD was successfully reached on 21 October 2024 after the decision to deepen the well.
· The well encountered the main Utrillas-A reservoir unit 50 metres high to prognosis and encountered the top reservoir with good quality reservoir rock with significant gas shows throughout the drilling of the main reservoir target and with gas-bearing formations extending some 30 metres deeper than nearby wells in the formation.
· Deepening the well to appraise the Utrillas-B formation has resulted in the discovery of a new gas-bearing section beneath the proven and producing Utrillas-A formation in the Viura gas field.
· Logging, flow testing and further detailed analysis of the large amount of data acquired from the well will be required before there can be a revision to the gas in place and recoverable reserves in Viura, although a material upgrade is anticipated.
· The Viura-1B well will be connected to the existing gas processing facilities on site during the planned flow testing programme, thus immediately generating revenues, with production income expected in November 2024.
· The Viura field recommenced production on 15 October 2024 from the existing well Viura‑1 ST3 to test the facilities following recent maintenance and upgrades ahead of the planned testing programme. It has been flow tested at rates up to 17 MMcfd (0.48 MMscm/d).
Having reached TD, the operator has run wireline logging tools to evaluate the Utrillas-B formation prior to completing this interval with a 4½ inch liner. A multistage completion will then be installed to allow an extensive flow testing programme to establish the flow rates from the different sections of the Utrillas-A prior to placing the well on long-term production. The flow testing program for the Utrillas B section will be performed later in 2025.
The well has already exceeded pre-drill expectations for the main reservoir target the Utrillas-A and preliminary analysis indicates it has encountered a new gas bearing reservoir interval in the previously undrilled deeper Utrillas-B formation.
As already announced on 2 October 2024, the well encountered the main Utrillas-A reservoir unit 50 metres high to prognosis with significant gas shows throughout the drilling and coring of the main reservoir target. Gas bearing reservoir was also encountered some 30 metres TVD below the deepest gas bearing intervals in nearby wells. The deepening of the well to evaluate the Utrillas-B formation has also been successful. Gas bearing reservoir formations have been encountered and analysis of the wireline log data to be acquired across this newly drilled formation will be carried out to assess the magnitude of the gas in place in this newly drilled formation. Crucially, flow testing will be conducted to establish reservoir deliverability prior to bringing the well onto production. Production facilities at the Viura gas plant, which is connected to the Spanish national grid network, will be able to process the gas produced during the testing phase for immediate export and sale.
The total extra cost of deepening the well to appraise the Utrillas-B section is on budget at a gross cost of €2.5 million. Prospex has already paid its 15% share of the costs (€375,000) to deepen and complete the well.
Mark Routh, the CEO of Prospex, commented:
“I am extremely pleased to announce further successful results from the Viura-1B development well. Although there is a great deal of analysis to be carried out to fully assess the implications of the well results to the recoverable reserves from the Viura field, this has transpired to be a highly successful project in which to be involved.
“Deepening the well to evaluate the previously undrilled formations below the proven, developed and producing Viura gas field has turned out to be an inspirational decision. There are positive signs that a new gas bearing interval has been encountered with further analysis and importantly flow tests required to quantify the impact on recoverable reserves.
“It is also good news that the existing well on the Viura field successfully recommenced production last week with the produced gas being sold into the grid.
“I look forward to updating shareholders with results from the flow testing and further analysis as soon we have firm data to share.”
This looks to be like a good result based on a good, if binary decision to go deeper at Viura-1B and has so far shown good gas flows ‘and several potential reservoir formations encountered in this previously undrilled section and with valuable new data acquired’.
Such results are only any good though if testing shows good performance and the shares will only perform if the market and shareholders get to know the rates…
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion
