Metgasco set to drill high-impact Perth Basin oil well in March

Metgasco is gearing up to drill a potentially transformative oil exploration well in the Perth Basin during the second half of March.

Metgasco (ASX:MEL) has secured the Ensign 970 rig for the Cervantes-1 exploration well that targets a P50 prospective resource of 15.3 million barrels of oil (4.6MMbbl net to the company).

Notably, the prospect is located on a high side fault trap that is similar to and on trend with existing oil fields such as Cliff Head, Jingemia and Hovea.

Success is potentially very lucrative for MEL, given oil prices are currently trading above the US$90 ($125.3) per barrel amid continued bullish signals – including a big drawdown in US crude stocks and rising global demand.

“I am pleased to have finalised environmental approvals and executed agreements to secure the Ensign 970 drilling rig to drill Cervantes-1 in the 2nd half of March,” managing director Ken Aitken said.

Size of the prize

“The Ensign 970 has an impressive track record in safely and efficiently drilling exploration wells for other operators over the last circa 18 months in the Perth Basin.

“Cervantes-1 with a P50 15mmbbls prospective recoverable resource is one of the largest remaining oil prospects in the onshore Perth basin.

“Combine the size of the prize with the current oil price of over $US90/bbl (the highest in seven years) and it’s clear to see the potential of a truly transformational commercial outcome for Metgasco shareholders on exploration success.”

A big oil prospect

Cervantes-1 is located within the L14 Cervantes joint venture that the company is earning a 30% interest in by funding 50% of the cost of drilling the well.

The well targets Permian sandstone reservoir targets which have been prolific producers in the Perth Basin.

All environmental approvals have been granted and preparatory site works will begin this week in preparation for the arrival of the Ensign 970 drilling rig at Cervantes in mid-March (subject to rig availability following the immediately preceding 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.