Metgasco (ASX:MEL) has received some early signs of success at the Vali-2 appraisal well in the Cooper-Eromanga Basin with gas shows observed in two formations.
Vali-2, which was drilled to appraise the extent of the Patchawarra Formation gas accumulation discovered in the Vali-1 ST1 well in Queensland, intersected the gas shows at the base of the Nappamerri and top of the Toolachee formations.
The latter is particularly encouraging given that assessing the potential for gas in the Toolachee is a key objective of the appraisal well.
Drilling is progressing towards the main Patchawarra Formation target with total depth expected to be reached around mid-May.
While it is still early days for Vali-2, the gas shows still represents an encouraging sign for Metgasco, which has a 25 per cent stake in ATP 2021 where the well is being drilled.
Should the well be successful, the joint venture can quickly proceed with development, given that it has already secured Australian Competition and Consumer Commission approval in the March quarter to jointly market and sell gas from the Vali field.
The gas shows also come as the company prepares to carry out further exploration in the Cooper-Eromanga and Perth basins.
“A significant amount of work was completed in the March quarter across all assets in preparation for the upcoming drilling programs in the Cooper and Perth Basins,” chief executive officer Ken Aitken said.
“The recent recovery in the Brent oil price is a bonus for achieving a farm-out on ATP2020 and boosting the potential value of an oil discovery at Cervantes in the Perth Basin.
“The June quarter will see the return to appraisal/exploration drilling and is expected to offer a rewarding period for shareholders.”
Once Vali-2 is drilled, the rig will move on to drill the Odin-1 exploration well in South Australia that targets P50 prospective gross recoverable resources of 12.6 billion cubic feet (Bcf) of gas.
Odin-1 will test the Toolachee and Patchawarra formations, identified by recent 3D seismic, up-dip of the Strathmount-1 discovery well that was drilled in 1987. It was plugged and abandoned as a non-commercial find due to low formation permeability and a poor mud system likely to have caused formation damage.
These wells and other potential gas prospects such as Kinta in the area may form the basis for a potential production hub at Vali, with operator Vintage Energy (ASX:VEN) planning to have flowline infrastructure feed gas from successful wells into the Vali hub where gas will be transported to market.
Metgasco and its partners also plan to re-complete the Vali-1 ST1 well later this year along with the potential completion of Vali-2 and Odin-1.
The company also started the farmout process for ATP2020 during the March 2021 quarter with several parties currently reviewing the data room.
The permit hosts the Loki prospect that has prospective recoverable resources of 6.4 million barrels of oil and 13.1Bcf of gas.
In the Perth Basin, Metgasco expects to receive final environmental and safety drilling approvals for the Cervantes prospect in L14 from the state government in the current quarter.
A Heritage survey was completed and approval granted to the access track and drilling pad. Contract negotiations are also underway with Refine Energy for a drilling rig.
Drilling the Cervantes-1 prospect is expected to begin in the third quarter of 2021.
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.
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Barry Stroman was a reporter for Zerg Watch, before becoming the lead editor. Barry has previously worked for Wired, MacWorld, PCWorld, and VentureBeat covering countless stories concerning all things related to tech and science. Barry studied at NYU.