14th Nov 2024 14:08
(Alliance News) - Petro Matad Ltd on Thursday said it has limited production at its Heron-1 well in its Block XX production sharing contract area in Eastern Mongolia amid safety concerns, and has suspended production at its Heron-2 well while it evaluates initial data.
Shares in Petro Matad were down 32% at 1.71 pence each in London on Thursday afternoon.
The petroleum exploration, development and production company focused on projects in Mongolia said that Heron-1 was producing well. It expected maximum deliverability to be similar to or greater than 821 barrels of oil per day, which it achieved during drill stem testing in 2019.
However, the company has observed "more associated gas than expected" in the oil from the Heron-1 well, which it said "improves the flow potential, but is also causing pressure fluctuations at surface."
Production at Heron-1 has therefore been limited to between 200 and 300 barrels per day, to prevent potential safety risks as it investigates whether modifications can be made to increase the stabilised flow rate.
Meanwhile, operations at the Heron-2 well have been suspended soon after they began at the end of October.
"Seven days were subsequently lost after the test rig suffered a major engine problem, but repairs were completed and operations resumed. By the end of the test, the well was producing a mixture of oil and what is interpreted to be stimulation fluids with productive potential estimated to be around 30 barrels per day. This is significantly lower than the rates observed in Heron-1," Petro Matad explained.
Production will be halted until the stimulation and pressure data has been reviewed, and a forward programme has been determined.
Chief Executive Officer Mike Buck said: "We are very pleased with the performance of the Heron-1 well so far, and we are encouraged that higher than expected stabilised flows may be achievable. We are looking into this as a matter of some urgency, although if surface modifications are needed, these will likely have to wait until after the winter operational shut down. The transfer of production to Block XIX is settling into a routine and we are pushing to be able to export and sell Block II crude as soon as possible.
"The Heron-2 well testing has not achieved the flow rates we were hoping for given the enthusiasm with which Heron-1 produces, but the presence and recovery of oil is encouraging, and we have some work ahead to understand the outcome so far and determine the forward programme for the well. This work will be done over the next few months as we finalise our operational programme for 2025."
By Emily Parsons, Alliance News reporter
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