Pantheon Resources, an oil and gas exploration company, has paused operations at a 50%-owned well in Texas after a series of equipment failures, but said a nearby fracking procedure has been successfully completed.
Drilling of the horizontal section of the VOBM#2 well in Polk County, East Texas has been delayed after the operator was forced to replace contractors a number of times before agreeing with Pantheon to temporarily suspend drilling operations.
The well, where gross costs are estimated to be between $5.6m and $6m, has however encountered "significant hydrocarbons", which Pantheon said confirmed the presence of a "productive reservoir" consistent with its pre-drill expectations.
According to the company this result shows "the prospectivity and potential of this prospect are undiminished", while the rig is now moved to drill the adjacent VOBM#3 development well at an estimated gross cost of $3.75m.
On the upside, a planned fracture stimulation treatment (fracking) on the VOS#1 well in nearby Tyler County has been completed.
Subsequent pressure buildup readings as the choke sizes were reduced offered "convincing evidence" that the fracking procedure was effective, Pantheon said, adding that it will take three to six months of production before a more accurate assessment of well flow volumes and ultimate estimated ultimate recovery (EUR) can be determined.
"The good news is that both the VOS#1 and VOBM#2 wells have encountered significant hydrocarbons in their objective horizons, exactly where we expected to find them, confirming the experience of all three of our initial wells," said chief executive Jay Cheatham. "I expect all three wells to be commercial producers."
He added: "Our priority now is to press on with the next two wells in our programme as quickly as possible, so that we can complete the delineation of what we have found in both Tyler and Polk County and move towards production at the earliest opportunity."
Pantheon's share price was down 43% to 85.14p by 1300 BST on Monday.