Metgasco is a step closer to drilling Cervantes oil exploration well
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Metgasco and its partners are on track to secure a rig to drill the Cervantes-1 oil exploration well that targets a lookalike of the Hovea oil field, with Waitsia type reservoir quality, in the onshore Perth Basin, WA.
The joint venture has signed a non-binding letter of intent with Strike Energy that sets out the framework for negotiation of a rig sharing agreement to provide for drilling of the well using the Ensign 970 rig.
Environmental approval is expected by the end of November with Metgasco (ASX:MEL) noting that drilling could start in the second quarter of 2022.
Cervantes-1 is expected to address a gross Prospective Resource (P50) of 15.3 million barrels of oil.
The Cervantes structure in the L14 licence is adjacent to the Jingemia oil field that has produced over 4.6 million barrels of oil to date.
It is also located in the gap between the oil discovery trend of the Hovea, Jingemia and Cliff Head oil fields while featuring a target reservoir that is significantly shallower than at Jingemia.(see map below). The total oil produced from nearby fields is in excess of 27MMbbl
An oil processing deal is already in place that will see any crude oil produced at Cervantes undergo processing at the Jingemia plant.
Metgasco is earning 30% in L14 by paying half the cost of drilling the Cervantes-1 well.
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.