Regal Petroleum well tests indicate 1,187 boepd gas discovery

Regal Petroleum (RPT LN) successfully completed drilling operations on its SV-53 well, the company reported Nov. 27 in an operations update. The initial SV-53 well tests indicate a hydrocarbon flow rate of 1,187 boepd. The well would be linked to a natural gas processing facility and start commercial production within two months. The company also reported its MEX-105 well has reached a depth of 4,650 metres, with a target depth of 5,250 metres. Regal is lacking progress in shutting off the water ingress at its MEX-3 well. The company’s gas and condensate production 4Q12 to date stood at 1,438 boepd (vs.1,418 boepd in 3Q12).

Roman Dmytrenko: Regal’s 4Q12 to date output of 1,438 boepd confirms the company would underperform our 1,620 boepd 2012 production estimate by at least 8%. In addition, the water ingress problems at MEX-3 indicate it might be shortly abandoned. At the same time, the SV-53 well flow rate, if sustainable, would allow Regal to boost its current production by 82% to 2,500 boepd in early 2013, putting it on track to deliver 3,000 boepd in gas production by mid-2013. Our key concern now is how sustainable is the exceptionally good flow rate of SV-53.