Gulfsands hits gas onshore Morocco

Gas find: Cabot 750 rig, above, sees drill success for Gulfands Petroleum

London-listed junior Gulfsands Petroleum’s stock jumped by 15% after the explorer announced a commercial gas discovery onshore northern Morocco.

The Middle East- and North Africa-focused explorer said that its Lalla Yetou Updip-1 (LTU 1) probe had flowed gas to surface at an estimated rate of 6.6 million standard cubic feet per day through a 28/64” choke.

Spud last month, the conventional gas exploration probe was drilled by Cofor’s Cabot 750 rig to a total vertical depth of about 1180 metres at the Rharb Centre Permit, which Gulfsands Petroleum operates on a 75% interest.

The explorer said wireline log interpretation showed it had hit a gas-bearing reservoir of 12 metres in gross thickness in the target Upper Miocene interval.

The LTU-1 well is currently being monitored for pressure build-up, after which it will be temporarily suspended as a future gas producer, Gulfsands Petroleum said.

Analysts Cantor said that the find showed “considerable near-term value contained within the proven conventional and shallow depth gas play in the Rharb permit” as well as exploration upside in adjacent permits.

The analysts pointed out that the gas could be sold at $8.50 per MMcf/d with wells that only cost $1.4 million, and that both industry gas demand and an existing pipeline network lay nearby.

“The Rharb permit offers Gulfsands access to imminent cash flow generation through inexpensive drilling and development capex,” the analysts said.

RBC said that on its own LTU 1 was a "modest prospect" that would only be a mild positive for the stock.

However, the analysts added, "more importantly the well confirmed an extension of the biogenic gas play onto Gulfsands’ acreage”, opening up the possibility of repeat success.

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