The Snow Leopard-1 well (100% Petro Matad) was drilled to total depth of 2,930m in granitic basement. No sands were encountered in the shallow target, although gases (C1 to C5) and an oil sheen were observed in the drilling mud. The deeper objective encountered an overall gross interval of more than 400m. However, no oil or gas shows were observed and the interval was found to be water-bearing. Once operations to plug and abandon the well are complete, the rig will move to the Wild Horse prospect, targeting 480mmbo of unrisked prospective resource in the Baatsagaan Basin. Our valuation included 4.2p/share risked for the Snow Leopard prospect, which we expect to remove from our RENAV of 30.8p/share, reducing it by 13.6% to 26.6p/share.
Written by
Petro Matad |
Snow Leopard – potential breached fault seal |
Well result |
Oil & gas |
20 September 2018 |
Share price performance
Business description
Analysts
Petro Matad is a research client of Edison Investment Research Limited |
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The Snow Leopard-1 well (100% Petro Matad) was drilled to total depth of 2,930m in granitic basement. No sands were encountered in the shallow target, although gases (C1 to C5) and an oil sheen were observed in the drilling mud. The deeper objective encountered an overall gross interval of more than 400m. However, no oil or gas shows were observed and the interval was found to be water-bearing. Once operations to plug and abandon the well are complete, the rig will move to the Wild Horse prospect, targeting 480mmbo of unrisked prospective resource in the Baatsagaan Basin. Our valuation included 4.2p/share risked for the Snow Leopard prospect, which we expect to remove from our RENAV of 30.8p/share, reducing it by 13.6% to 26.6p/share.
Year end |
Operating cash flow ($m) |
PBT* |
Net debt/(cash) ($m) |
Capex |
EBITDA ($m) |
12/16 |
1.8 |
10.8 |
(6.5) |
(0.6) |
11.1 |
12/17 |
(2.5) |
(9.9) |
(5.1) |
(3.1) |
(9.7) |
12/18e |
(5.4) |
(5.4) |
(16.7) |
(16.0) |
(5.5) |
12/19e |
(5.4) |
(5.4) |
1.5 |
(12.7) |
(5.5) |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
Evidence of active petroleum system: management believes that gases in the shallower horizon indicate an active petroleum system in the Taats basin and oil may have entered the well from one of the Snow Leopard prospect’s bounding faults. Deeper sections of the well contained well-developed source and reservoir intervals, confirming source and reservoir out-crops on the basin flanks. Management believes that the lack of hydrocarbons in the deeper objective is likely due to a breach of the prospect’s bounding fault seal.
Wild Horse next: Wild Horse sits in the Baatsagaan Basin in Block IV, updip of the two largest and deepest identified potential kitchen areas mapped in Petro Matad’s acreage. The prospect is estimated to hold mid-case recoverable resources of 480mmbo across three targets. Success here will rely on the migration of hydrocarbons into the structural high. Wild Horse has a closure area of 22km2 and a simple focused migration pathway has been identified from the south-west.
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Disclaimer
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Disclaimer
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SCISYS has reported a strong H1 with professional fees jumping 24%. However, this was off a weak H117 and some business was brought forward from H2. Consequently, we are forecasting a more balanced H1/H2 in FY18. We have increased our FY18 revenues by £3.0m to reflect this balancing, but we have maintained our profit forecasts. All divisions posted record revenues, the order book remains robust at close to £100m and net debt continues to decline. Management’s goal of £60m in revenues and double-digit margins within the next few years looks increasingly conservative and we believe the stock is solid on c 14.6x our FY19e EPS.