Uruguay’s first oil discovery sends Petrel Energy shares into orbit

Petrel Energy investors were all smiles after the minnow reported the first ever confirmed discovery of oil in Uruguay.

The news caused Petrel (ASX:PRL) shares to skyrocket as much as 158 per cent on Monday to an intraday high of 3.1c before cooling to 2.8c — up 133 per cent at the final bell.

Petrel drilled its Cerro Padilla 1 well in Uruguay’s Norte Basin, to a depth of 845 metres, confirming 2 metres of oil saturated sand at 793 metres.

The Norte Basin is part of a huge sedimentary area called Paraná Basin in Brazil and Paraguay (and known as Chaco-Paraná Basin in Argentina). The basins cover 1.2 million sq km.

Explorers have sought oil there since the early 20th Century. More than 175 exploratory wells have been drilled and 50,000km of seismic exploration completed in the area.

The Norte Basin in Uruguay where Petrel Energy confirmed an oil discovery. Source: US Geological Survey

Petrel holds a 51 per cent working interest in the project while private explorer Schuepbach Energy Uruguay holds the remaining 49 per cent.

Cerro Padilla-1 is now being readied for production testing.

It is the first of four conventional exploration wells to be drilled in the Norte Basin on concessions covering 3.5 million acres.

“While further evaluation is required to understand the full potential of these excellent initial results, the significance of being the first group to discover oil on this frontier basin cannot be underestimated,” Petrel chief executive David Casey told investors.

“Although only a modest discovery in its own right, and regardless of the results of production testing, when viewed in the context of what this could mean for the rest of the program and the concessions as a whole, it represents a quantum first step in redefining the oil and potentially gas prospectivity of the Notre Basin.

“It’s not been an easy process drilling the first onshore exploration well in 30 years in Uruguay but this is an outstanding achievement for the first of a four-well program,” he said.

The four-well program will cover as much of the concession area as possible while targeting various exploration objectives across each well including finding oil and gas targets.

Petrel has a market cap of $46 million.