Metgasco (ASX:MEL) prepares to spud Cervantes-1 well, as oil price hits seven-year high

• Metgasco (MEL) is set to spud the Cervantes-1 well located in the Perth Basin with a drill rig and all environmental approvals secured, as the price of oil hits a seven-year high
• The well is to be drilled by the L14 Cervantes Joint Venture in which Metgasco, the project manager, is earning its 30 percent stake by funding 50 per cent of the costs
• Drilling has been designed to target Permian sandstone reservoir targets which MEL says have been prolific producers in the Perth Basin
• With preparatory site works to commence this week, the Ensign 970 drilling rig is expected in March with the well to spud in the latter half of the month
• Company shares have been up 3.4 per cent trading at 3 cents at 3:06pm AEDT

Metgasco (MEL) is set to spud the Cervantes-1 well located in the Perth Basin with a drill rig and all approvals secured, as the price of oil hits a seven-year high.

The Cervantes-1 well is to be drilled by the L14 Cervantes Joint Venture in which Metgasco, the project manager, is earning its 30 percent stake by funding 50 per cent of the costs.

The other partners are fellow ASX-lister Vintage Energy (VEN) also holding a 30 percent interest and funding the other half of the costs, and RCMA Australia with a 40 percent stake.

The well is to be operated by RCMA, with drilling management services supplied by Aztech Well Construction.

Located on trend with the Cliff Head, Jingemia and Hovea oil fields, the structure is said to be a high side fault trap similar to other fields in the basin.

Drilling has been designed to target Permian sandstone reservoir targets which MEL said have been prolific producers in the Perth Basin.

Cervantes is estimated to contain gross recoverable prospective resources of 15.3 million barrels of oil, with 4.6 million barrels of that net to Metgasco.

Preparatory site works are set to begin this week, in preparation for the arrival of the Ensign 970 drilling rig in March.

According to the company, this particular rig has an “impressive track record” in safely
and efficiently drilling exploration wells for other operators over the last 18 months in the Perth Basin.

All environmental approvals have also been secured and the well is scheduled to spud in the latter half of the month, depending on drill rig availability following the immediately preceding well.

As the price of oil hits over US$90 (A$125.45) per barrel, the highest in seven years, Metgasco Managing Director Ken Aitken said “its clear to see the potential of a truly transformational commercial outcome for Metgasco shareholders on exploration success.”

Metgasco shares were up 3.4 per cent, to trade at 3 cents at 3:06 pm AEDT.