Metgasco drilling high impact Perth Basin oil exploration well

Metgasco is drilling ahead with its Cervantes-1 oil exploration well in the Perth Basin, Western Australia, that targets about 15 million barrels of oil equivalent.

The well, which spudded over the weekend, is on trend with the Cliff Head, Jingemia and Hovea oil fields and targets Permian sandstone reservoir targets within a high side fault trap similar to other fields in the Basin.

Cervantes-1 is as a moderately deviated well with the surface location about 808 metres east-south-east of the subsurface primary target due to surface constraints with Metgasco (ASX:MEL) noting that it is expected to take 16 days to reach its planned total depth of 2613 metres(MDBRT)

The company is funding 50% of the well costs to earn a 30% interest in the L14 Cervantes Joint Venture.

Potential game changer

While the targeted oil volumes are certainly nothing to sneeze at, what makes a successful discovery potentially lucrative for Metgasco is the current price environment with the Brent crude benchmark remaining well above the US$100 per barrel mark.

This has the potential to deliver significant revenues at attractive margins.

Development will also be rapid given that the well is just 3km from the existing Jingemia production facilities with a facility oil processing tariff already in place.

This article was developed in collaboration with Metgasco, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.