Strike one for the Members!
It’s good news this week for holders of Matra Petroleum, not to mention BMD Members who have backed this company through thick & thin. 2011 certainly wasn’t a vintage year as Matra fought its own demons with well problems aplenty on its 100% owned Sokolovskoe oilfield in Orenburg Russia. This week the company brought A-13 into production, a significant event, although it will take a few weeks for production to stabilize at an initial 40 barrels per day.
The Sokolovskoe field carries 2C contingent recoverable resources of 15 million barrels and produces a light sweet crude with an API of 37 degrees. There’s also potential upside with an additional 38 million barrels, which is be appraised during development drilling. First oil is an important MILESTONE in proving up the case for Matra which at first glance looks compelling; small Russian fields are a good investment proposition. It’s not been an easy ride for holders of the stock with many false dawns reached, breached then beached! Due a number of geological problems and well completion problems along the way.
Demonstrating the company’s credibility as a proven oil producer is key here to funding/farm-in. The downhole electric submersible pump, is expected to raise output to 100 bopd, the incentive here for the company to get it right is cash-flow. The pump installation will take place after the end of the thaw period, which lasts four to six weeks. “Once the roads have dried out then we can get the workover rig in and install the pump, which isn’t a big job,” Says managing director Peter Hind “You can’t do it before because the ground gets very soft and we don’t want the rig to get stuck out there on day rate.” It’s all about money!
First oil has certainly taken its time. It’s been one disaster after another at times investors must have been doubting their sanity but first oil should now help to calm the nerves “frayed” just doesn’t convey the trauma private investors have endured. Matra will now be able to benefit from strong oil prices and the improved fiscal terms for small fields that came into force at the start of the 2012.
A-12 The discovery well had promised much, having tested at rates of approx’ 1,000 bopd and later, after an acid treatment and nitrogen lift, delivered over 1,400 bopd. A sub-standard cement job put paid to this. The well had to be shut in and was later found to be holding large volumes of water. Deja vu “water, water every-where”; to coin a phrase but to coin another phrase “it’s always darkest before the dawn” A-13 was successfully completed by remedial cementation. Changes in well design during development drilling should put paid to water issues that have soaked this company, at one point nearly drowning them.
Given the problems at A-12, the company decided to focus on A-14, which will be a key test of Matra’s “patch reef” geological model for the field. The well will test the top of the field and should intersect the reservoir some 20 metres higher than A-12, thereby avoiding the oil-water contact. Unlike A-12 and A-13, drilled in the reef debris zone, A-14 will drill into the centre of the patch reef: success here could add up to 10 million barrels to the £11.7 million market cap company’s contingent resources. The well also lies near Well 309 on a nearby property, which was drilled in 1991 by TNK/BP and found thicker and better oil pay and flowed 1,850 bopd on test.
The company has high hopes for A-14, which will be drilled between three known oil wells, up-dip from A-12 and in an area covered by existing 3D seismic. It doesn’t get much better than that so company hopes are riding high. Permits have been granted to drill the well but timing now depends on the end of the thaw period, rig availability and the big crunch issue: funding. Matra raised £1.2 million in November but will need to raise further funds for this drilling work as well as a planned full-field 3D seismic survey, which it hopes will provide more information about the little-covered north-eastern part of the field and help inform planning for a full field development further down the line.