Numis Securities highlighted that investors in Premier Oil (LON:PMO) will have to look to the North Sea for the stock’s next catalyst after the Qua Mit Vang well, offshore Vietnam, was abandoned as a dry hole today.
This morning Premier told investors that the 104-QMV-1X well, also known as the Qua Mit Vang exploration well, was drilled to a total depth of 3,832 metres in fractured basement rock. However a drill stem test (DST) was carried out and the well flowed gas containing 99 percent carbon dioxide.
Qua Mit Vang was the last of three potential catalysts that Numis had been waiting for. The two prior catalysts, which were successfully delivered by Premier, were first oil from Chim Sao and first gas at Gajah Baru.
Now the broker believes the next catalysts for Premier will be the East Fyne, Erne and Bluebell exploration and appraisal wells in the North Sea. Analyst Sanjeev Bahl reckons these wells will be medium-to-low risk, but together they could add around 4 per cent to Premier’s current value as estimated by Numis – currently 482p a share.
Bahl said that today’s negative exploration result was clearly disappointing particularly after ExxonMobil announced a nearby discovery just yesterday. The analyst also points out that other recent discoveries have been made in the area
“We believe Premier will have to determine why the basement was saturated with CO2 at the well location, that is despite Petronas and the Chinese having made hydrocarbon discoveries in nearby blocks on the Song Hong basin,” Bahl said.
- US gas find off Vietnam adds to China tension (FT) (thuytinhvo.wordpress.com)
- Premier Oil: First production will start Friday morning from Chim Sáo oil field in Vietnam (FE Investegate) (thuytinhvo.wordpress.com)
- Oil Cos Continue to Drill Offshore Vietnam as South China Sea Tension Rises (Rigzone) (thuytinhvo.wordpress.com)