RH Petrogas has commenced initial drilling - known as spudding in - of an exploration well in Indonesia, hoping to turn it into a producing well if it makes commercial sense.
In its Jan 20 announcement, the company says its 82.65%-owned subsidiary Petrogas (Island) has started drilling the Piarawi-1 exploration well in the Salawati Production Sharing Contract (PSC) in Indonesia's Southwest Papua.
The well is located 6 km north of the Matoa field which is the company's main producing field and currently accounts for more than 70% of the block’s oil production.
RH Petrogas plans to drill some 10,700 feet down and the drilling will take some 50 days.
According to RH Petrogas T13 , the Piarawi-1 well targets an untested carbonate buildup which shares the same structural style and similar rock facies with the Matoa field.
Specifically, the well is to test the oil potential in a structural trap within the Kais carbonate interval which is the main oil-producing reservoir in the block.
See also: Petrobras CEO says Yemen crisis could send oil above US$90
The Piarawi-1 well is the first exploration well to be drilled under the firm work commitment of the Salawati PSC which commenced in 2020 on a 20-year term.
"The objective of the Piarawi-1 exploration well is to prove up oil accumulation trend similar to the main Matoa producing area," says the company's group CEO and executive director Francis Chang.
"If successful, the well can be converted into an oil producer to monetise the newly discovered resources quickly given the proximity to existing infrastructure.
See also: Saudi Arabia cuts oil prices to Asia as market weakness persists
"In the event the well turns out to be a gas discovery, the group will assess its commerciality for development given the growing gas demand in the region," he adds.
Piarawi-1 follows the drilling of another exploration well Karuka-1 sited within its Kepala Burung Production Sharing Contract.
In its Dec 26 2023 update, the company said drilling was done up to 11,200 feet - deeper than the initial plan of 10,400 feet.
However, the company decided there was no oil-bearing reservoir and the well was plugged and abandoned.
RH Petrogras will book US$11.6 million in costs incurred for this failed attempt in its FY2023 ended Dec 31, 2023.
On October 6, the company announced that another exploration well, Riam-1, had been plugged too, with US$5.9 million in costs to be booked in the same FY2023.
RH Petrogras closed at 17 cents on Jan 19, down 1.69% for the day and down 13% over the past year.
