Enwell Energy Share News (ENW)

(Sharecast News) - Oil and gas exploration and production company Enwell Energy updated the market on operations at its Mekhediviska-Golotvshinska (MEX-GOL) and Svyrydivske (SV) gas and condensate fields, and its Svystunivsko-Chervonolutskyi (SC) exploration licence in Ukraine on Monday.
The AIM-traded firm said at the SV field, testing operations on the SV-29 development well had been delayed due to local material shortages, but supplies had now improved and progress was made with the well's initial testing.

It said the well was spudded in February, and drilled to a final depth of 5,450 metres, with its primary target being the V-22 reservoir within the Visean formation.

To-date, one interval within the reservoir, at a drilled depth of 5,246 to 5,249 metres, had been perforated.

Testing of that interval was underway using a variety of choke sizes, and initial results were said to be promising, with gas flows and an "unexpectedly high, but somewhat variable" proportion of condensate.

The company said the higher-than-expected condensate rates had required that the testing procedures be modified, and a longer period of initial testing of the interval would be required.

Once completed, the company said it intended to perforate and test a further interval, at a drilled depth of 5,228 to 5,232 metres, in the V-22 reservoir.

Thereafter, the well would be run through the gas processing facilities to allow longer-term production testing to be conducted in order to optimise the operating parameters of the well.

The well was also appraising the V-21 and V-23 horizons, and within those horizons, there were indications of hydrocarbons based on well logs which warrant further investigation in due course.

Drilling of the SV-31 well at the SV field, meanwhile, was ongoing, with the well having reached a depth of about 4,489 metres.

Enwell said the well was spudded in September, and had a target depth of 5,250 metres.

The well was a development well, targeting production from the V-21 and V-22 reservoirs in the Visean formation, which had demonstrated "good productivity" in an existing nearby well.

Drilling operations were scheduled to be completed by the end of the first quarter of 2022, and, subject to successful testing, production hook-up was scheduled during the second quarter of 2022.

In addition, the SV-2 well at the SV field had experienced water ingress, and as a result had been taken off production.

A workover of the well was being undertaken to investigate the cause of, and seek to remedy, the water ingress, which was planned to include the replacement of the production string.

However, the firm said the well was drilled in the early 1980s, and so the condition of the equipment in the well could be poor and require alternative work to remedy the water ingress.

The well was operated under a joint venture agreement with PJSC Ukrnafta, the majority state-owned oil and gas producer, under which the gas and condensate produced was sold under an equal net profit sharing arrangement between the company and PJSC Ukrnafta.

At the MEX field, the MEX-109 well had also experienced water ingress and as a result had been taken off production.

Enwell drilled and completed the well in 2017, meaning technical information was readily available to assist with the investigation of the cause of the water ingress.

A workover of the well was underway, and logging would be undertaken shortly to identify the source of the water ingress, followed by appropriate remedial works.

The shut-in of the SV-2 and MEX-109 wells had impacted current production rates and, depending on the duration of the requisite remedial works, would potentially have a "material impact" on the company's overall production volumes for the fourth quarter.

However, continued high hydrocarbons sales prices would help to offset the anticipated overall lower production volumes and the resultant impact on revenues in the final quarter of the year.

At the SC licence, drilling of the SC-4 well was continuing, with the well having reached a depth of about 4,613 metres.

The well was spudded in August, and had a target depth of 5,565 metres.

Enwell said it was primarily an appraisal well, targeting production from the V-22 horizon, as well as exploring the V-16 and V-21 horizons, in the Visean formation.

Drilling operations were scheduled to be completed in mid-2022.

Also at the SC licence, the acquisition of 150 square kilometres of 3D seismic had begun, and was expected to be completed early in 2022, with processing and interpretation of the acquired seismic data scheduled for completion in the second quarter of 2022.

Finally, work on the upgrades to the gas processing facilities at the MEX-GOL and SV fields was underway, Enwell confirmed.

In total, the works were scheduled to take about three-and-a-half months to complete, and involved an upgrade of the LPG extraction circuit, an increase to the flow capacity of the facilities, and a "significant increase" to the liquids tank storage capacity, which were designed to improve overall plant efficiencies, improve the quality of liquids produced and boost recoveries of LPG, while reducing environmental emissions.

"We are pleased to finally have some initial results from the SV-29 well, after the delays caused by the supply constraints in Ukraine, and look forward to making further progress with the testing of this well," said chief executive officer Sergii Glazunov.

"We are also pleased with the good progress we are making in the drilling of the SV-31 and SC-4 wells, the commencement of the acquisition of 3D seismic at the SC licence and the initiation of the construction works at the MEX-GOL and SV gas processing facilities.

"It is unfortunate that both the SV-2 and MEX-109 wells have suffered water ingress around the same time, but we have moved quickly to commence workover operations on both wells and hope to remedy the issues encountered in the near future."

At 0813 GMT, shares in Enwell Energy were down 2.71% at 0.43p.