Carnarvon Petroleum Limited (ASX:CVN) has provided an update on the drilling of the Phoenix South-3 well, offshore Western Australia.
The report, which indicates drilling is going to plan, was advised by the operator and 80% joint venture partner Quadrant Energy.
Since the last report, after setting the 36-inch surface conductor, the well has been drilled down to around 1,500 metres measured depth in a 26-inch hole size.
The primary objective for the Phoenix South-3 well is to evaluate the gas and condensate potential of the Caley Member within a large, faulted anti-clinal closure that was partially penetrated with the Phoenix South-2 well.
Phoenix South-2 encountered gas and condensate in the Caley Member but was unable to drill through and evaluate the formation.
The Phoenix South-3 well has been optimally designed to penetrate and evaluate the hydrocarbon-bearing formations of the Caley Member.
Close proximity to Phoenix South-2
Phoenix South-3 is around 560 metres north-northeast of the Phoenix South-2 well.
The well is targeting a closure estimated by Carnarvon to contain a gross mean recoverable prospective resource of 489 billion standard cubic feet of gas and 57 million barrels of associated condensate.
This represents 143 million barrels of oil equivalent.
Brokers like the story
Analysts at Hartleys view Carnarvon as one of the best stocks to target to gain leverage to the oil price recovery.
Furthermore, the broker said that the upcoming drilling campaign is potentially a transformational stage for the company.
Hartleys analyst Aiden Bradley said: “Discoveries to date in the Bedout Sub-Basin (especially Phoenix South Caley) have contained a very high liquids content and is a potential game-changer in terms of the economics of any potential development in the sub-basin.
“It is also a huge differentiator in comparison to the investment returns from a dry gas field such as the developed (similarly sized) Reindeer Field.”
The broker has a price target of 25 cents on the stock, representing a sizeable premium to the 12-month high of 15.5 cents which was struck this week.