Talos Energy Inc. (TALO - Free Report) recently started the initial drilling of the Zama-2 appraisal well, officially marking the beginning of the Zama discovery appraisal program, located in Block 7 of the Sureste Basin. The project will incorporate the drilling of two wells and one side track, with the help of Ensco 8503 semi-submersible drilling rig of Ensco plc (ESV - Free Report) . Notably, the Zama discovery appraisal program is expected to witness an investment of $250 million.
During September-end, Talos received regulatory nod from the National Hydrocarbons Commission for the appraisal. The Zama-2 well is located to the north of the Zama discovery well. The well, which will be drilled nearly 500 meters below the reservoir, is expected to enable the company to get a better understanding of the reservoir.
The company plans to perform a drill stem test in second-quarter 2019 for the Zama project. The company earlier expected the well to hold recoverable oil and gas reserve of 60-150 million barrels of oil equivalent. The company intends to drill Zama-3, the second appraisal well, for characterizing reservoir continuity and quality.
Talos expects the appraisal program to end within mid-2019, with the help of local suppliers’ supporting services. McDermott International, Inc.’s (MDR - Free Report) Mexican unit is expected to provide assistance in pre-FEED analysis of the field’s potential development options, after the appraisal takes place. Production from the project is expected to start in 2022.
Talos, holding 35% stake, is the operator of Block 7. It has Premier Oil PLC (PMOIY - Free Report) and Sierra Oil & Gas as partners, possessing 25% and 40% participating interests in the block, respectively.
Price Performance & Zacks Rank
Talos Energy has lost 18.9% in the past year compared with 11.1% collective decline of the stocks belonging to the industry. Currently, Talos Energy has a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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