2nd Sep 2015 10:11
LONDON (Alliance News) - MX Oil PLC shares rose on Wednesday after it said the Aje-5 well on its acreage offshore Nigeria has reached its target depth ahead of schedule and encountered an oil bearing reservoir to keep the company on track to generate significant near term production.
MX Oil shares were up 21% to 2.88 pence per share on Wednesday morning.
MX Oil has an indirect, non-operated, 5% revenue interest in the OML 113 licence offshore Nigeria which it hopes will produce first oil in December and be commercially producing early in 2016 to provide the company with a platform for it to carry out its plans in Mexico.
MX is hoping to secure its licences in Mexico at around the same time production begins in late 2015, supplying much needed cashflow to begin developing its Mexican assets.
"Thanks to the excellent progress made at Aje-5, we remain on course to generate significant near term production," said Chief Executive Stefan Olivier.
The company said the Aje-5 well reached targeted depth of 3,255 metres ahead of schedule and encountered 19.4 metres of gross oil-bearing reservoir in the targeted Cenomanian level. The presence of oil in that reservoir has been confirmed by gamma ray, resistivity, neutron and density tests which show the amount is in line with expectations.
In addition, the Aje-5 well also intersected 72 metres of gross hydrocarbon-bearing Turonian sandstone and initial tests suggest this net reservoir is slightly larger than those intersected at the Aje-1, Aje-2 and Aje-3 wells, it said.
"The Aje joint venture partners continue to evaluate opportunities to commercialise this significant hydrocarbon resource in the future," said MX Oil.
The well is now being completed as a subsea oil production well. Aje-5 is the first of a two well phase one drilling programme on the licence. The rig used to drill Aje-5 will now move and re-enter the existing Aje-4 well to complete it as a second production well.
Those two wells are expected to produce 11,000 barrels of oil per day at peak production.
Once that first phase is completed, MX Oil and its partners will begin the second phase which will push up production to 19,000 barrels of oil per day from two additional wells.
"The 5% revenue interest in licence OML 113 in which we have invested therefore has the potential to provide us with a highly cash generative platform, if the drilling programme is successful, from which to develop onshore concessions we are targeting as part of the reopening of the vast Mexican energy sector," said Olivier.
"With the award of Mexican onshore concessions expected in December 2015, this is an exciting period for MX Oil, and I look forward to providing further updates on our progress as we focus on generating substantial value for our shareholders," he added.
By Joshua Warner; [email protected]; @JoshAlliance
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