Predator Oil & Gas Provides Operational update

MOU-2 drilled to 1260 metres and suspended for operational reasons with an option to re-enter.MOU-3 drilled to 1509 metres and completed for rigless testing.

MOU-3 encountered formation gas shows and shallow higher pressure gas.Gas charge from deeper source rocks confirmed via major fault conduits

MOU-4 drilling at the end of the period under review.

Rigless testing programme being planned using ECS Sandjet perforating tool.

Compressed Natural Gas “Proof of Concept” development model established.

Potential Jurassic upside within 126 km2 structure being evaluated by MOU-4

Entry into a binding term sheet with Challenger Energy Group Plc for the acquisition of the under-developed Cory Moruga field subject to regulatory consent for an agreed new work programme.

Company approached by a potential partner for Corrib South offshore Ireland in the event of the award of a successor authorisation.

The extension of the Initial Period of the Guercif Petroleum Agreement by a further 9 months allowed the Company to advance a drilling programme scheduled for the First Extension Period thereby satisfying all drilling commitments for the First Extension Period. It also facilitated the rollover of the current bank guarantee in favour of ONHYM without the requirement to increase the amount.

The first well in the programme, MOU-2, was drilled in January to target an area of the “Moulouya Fan” interpreted to potentially contain thicker reservoir sands.

The well was suspended at 1260 metres depth, above the intended primary target, due to operational issues impacting the drilling rate. It was left in a condition to facilitate an option to re-enter following an analysis of the drilling mud system to determine the changes that would be required to improve drilling performance and reduce the risk of getting logging tools stuck downhole in a particular unplanned-for geological formation. This was interpreted from the mud log and gamma log acquired whilst drilling as a large-scale slump feature.

The well could only be logged down to 1010.87 metres depth where the logging tools could not penetrate into the section interpreted as the slump feature.

Below the logged interval a gross interval of 165 metres was penetrated with up to 100 metres of variable quality sand. Presence of significant thicknesses of sands not seen in MOU-1 drilled 8 kilometres to the west in 2021 confirmed the pre-drill predictions that the area to the east offered greater potential for sand development at the level of the primary target

The second well in the programme, MOU-3, was drilled and completed for rigless testing in June. It tested a shallow four-way dip closure and a deeper down-faulted closure potentially sealing against a fault at the level of the primary target.

Within the shallow closure over-pressured gas was unexpectedly encountered in an 11 metre-thick sand from 339 to 350 metres depth with a 3% formation gas show. The interval was estimated to be 122 psi over-pressured.

Further formation gas shows were encountered in sands at 449 metres (1.0%), 509 metres (1.35%), 555 metres (1.51%) and 751 metres depth (2.42%).

No provision for wireline logging had been made pre-drill for this shallow section.

Due to the unexpected presence of over-pressured shallow gas a different well design would need to be considered and the MOU-3 well twinned to approximately 800 metres depth to safely conduct a rigless test in this interval.

Structural closure is estimated to be up to 6 km² within this gross interval of 450 metres with several levels of gas-bearing sands.

Potentially material gas resources may be present within this structural closure.

Deeper within the shallow structural closure the “Ma and TGB-6” sands were encountered from 815 to 895 metres depth with formation gas show of 2.06% at 817 and 3.0% at 841 metres depth. Five potential sands with higher background gas were present. Individual sands have a maximum thickness of 3 metres giving an estimated cumulative thickness of 11.5 metres versus a P10 pre-drill forecast sand thickness of 10 metres.

Pre-drill P50 structural closure was determined to be 6km² for the area containing the Ma and TGB-6 sands.

Preliminary post-drill seismic interpretation indicates that the MOU-3 shallow structure may persist several kilometres to the southwest towards the MOU-1 well drilled in 2021, where formation gas shows and gas was interpreted in the Ma and TGB-6 sands.

Several thin sands up to one metre thick were encountered between 1046 and 1140 metres depth. The upper sands are interpreted as being the TGB-4 sands. Borehole quality is poor in this section and further petrophysical analysis supported by rigless testing is required to fully evaluate the potential of this section.

The “Moulouya Fan” target was encountered between 1378 and 1437 metres with approximately 50.5 metres of sand versus a pre-drill P50 expectation of 19 metres.

Elevated background gas readings were recorded whilst drilling this section and a formation gas show of 0.95% was encountered at 1395 metres drilling depth. This section was drilled significantly over-balanced with a mud weight of 1.47 SG to reduced shale cavings from highly mobile claystones in an interval above the Moulouya Fan.

The Moulouya Fan interval penetrated by MOU-3 is defined by a sequence of strong seismic events covering an area of at least 30 km². The potential for a large stratigraphic trap exists within which there may be faulted compartments.

MOU-3 reached its planned total depth of 1,509 metres TVD MD on 21 June 2023. Wireline logs were acquired for the interval from 725 to 1509 metres depth. NuTech wireline log analysis and reservoir characterisation of the MOU-3 well highlighted 43 metres to be likely gas sands. The well was completed for rigless testing using the Sandjet water jet perforating technology widely used in the United States. The primary advantage of Sandjet is that it allows deeper penetration into potential gas reservoirs beyond the wellbore zone impacted by heavier drilling mud invasion in circumstances where the drilling is over-balanced. It is also more cost-effective compared to conventional perforating options using explosives where there are a number of separate reservoir sands to be evaluated for assessing the potential to co-mingle on production.

MOU-3 successfully satisfied several key pre-drill objectives.

·      It de-risked gas charge to identify migration pathways for deep thermogenic gas to ascend to shallower potential reservoir sands, thereby creating the framework for re-evaluating other prospective structures adjacent to these migration pathways with potential Jurassic and Tertiary sandstone and carbonate reservoirs;

·      It verified the integrity of the MOU-3 hydrocarbon trap at multiple levels and enhanced the case for significant shallow gas potential;

·      It de-risked, subject to the rigless testing results, the “Proof of Concept” for the minimum volume and likely gas flow rates required to initiate a CNG development;

·      subject to rigless testing results, MOU-3 confirmed the scalability of an initial CNG development to meet the near-term demands of the Moroccan industrial market; and

·      validated that the reservoir distribution over multiple levels is ideally suited to the scalable CNG development concept focussed on transporting gas by road and not relying on large-scale capital investment in fixed pipeline infrastructure.

At the end of the period under review MOU-4 had commenced drilling.

The primary objectives of the MOU-4 well are to evaluate a potential southwestern extension of the Moulouya Fan and to penetrate and confirm the presence of a Jurassic section to satisfy a specific drilling licence commitment whilst also evaluating the rationale for testing a Jurassic structure covering up to 126km² in an optimal crestal position.

The rigless testing programme is intended to begin with the testing of MOU-1 at multiple shallow and deep levels.

Paul Griffiths, Executive Chairman of Predator, commented:

“This has been a particularly active period for the Company as we have begun executing a multi-well drilling programme onshore Morocco. Operations have been managed efficiently and initial drilling results are very encouraging. MOU-3 results have so far exceeded management’s pre-drill expectations.

Market sentiment has changed for the oil and gas sector in the early part of 2023 and those companies that are activity driven and focussed on drilling and delivering near-term value with a reasonable expectation of early monetisation are being favoured by investors in the sector.

Gas is a commodity in Morocco which is much in demand and the industrial market ensures gas price stability within a favourable fiscal regime that facilitates longer term planning and creates greater certainty for asset valuation independent of global pricing trends.

Our strength lies in being an early mover to identify value-creating opportunities and to patiently bring them to a stage where early monetisation is a realistic goal.”