MOU-6 preliminary well testing update

MOU-6 failed to flow gas, shifting focus to future studies and partner search.

What the company is saying

Predator Oil & Gas Holdings Plc reports that the MOU-6 well in Morocco was successfully perforated over a 19.8-metre interval but did not yield hydrocarbon inflow, with only diesel and brine recovered. The company attributes this outcome primarily to low permeability and low gas saturations, supported by NuTech log data showing inferior reservoir qualities compared to previous wells. CEO Paul Griffiths acknowledges disappointment but highlights the value of the data for calibrating unconventional gas potential and guiding future exploration. The announcement pivots to next steps, including post-well studies, a potential deepening of MOU-6, and a broader focus on unconventional gas opportunities. Predator emphasises its intent to align with a partner for further exploration and development, especially given the capital requirements for additional drilling and seismic. In Trinidad, operational focus shifts to the Snowcap-3 well, and the company confirms completion of the first deferred payment for the Challenger Energy Group asset acquisition. Predator also stresses its favourable fiscal position in Trinidad, receiving 30% of gross sales revenues and reducing Petroleum Profit Tax from 50% to an effective 12.5% using tax losses.

What the data suggests

The MOU-6 well was perforated from 825.7 to 845.5 metres, but formation pressure at 813.27 metres was not fully stabilised and no gas inflow was achieved. Nitrogen lift operations recovered only diesel and brine, indicating no commercial hydrocarbons at this interval. Shallow gas shows up to 2.69% were detected and sampled, but no production volumes or resource estimates are disclosed. NuTech logs confirm much lower permeability, gas saturations, and porosities in MOU-6 relative to MOU-1, MOU-3, and MOU-4, matching the poor well performance. The well has been suspended for possible deepening to the TGB-4 interval, and post-well studies are planned to investigate the reservoir's potential. The company has now drilled six wells in this frontier area, fulfilling its work programme commitment for the First Extension Period. In Trinidad, Predator receives 30% of gross sales revenues and can reduce Petroleum Profit Tax from 50% to 12.5% using tax losses, but no absolute revenue or production figures are provided. The announcement is operationally detailed but lacks immediate commercial results or financial trajectory data.

Analysis

The announcement provides a technically detailed update on the MOU-6 well, but the realised results are disappointing: no hydrocarbon inflow was achieved, and the well is suspended pending further studies. The tone is measured, but the narrative pivots quickly to future potential—unconventional gas, deepening other wells, and partnering for further exploration—despite the lack of immediate commercial success. Most key claims about value creation, commercialisation, and asset potential are forward-looking, with benefits likely years away and contingent on further drilling, seismic, and partner engagement. The capital intensity is high, as the company outlines the need for additional drilling and seismic without any immediate earnings impact. While the Trinidad update includes some realised facts (revenue share, tax rate), no absolute financials or production volumes are disclosed. The gap between narrative and evidence is moderate: the technical setbacks are acknowledged, but the focus on future upside inflates the signal relative to current progress.

Risk flags

• ●Operational risk is high, as the MOU-6 well failed to deliver hydrocarbon inflow despite technical success in perforation, and the main causes are attributed to low permeability and gas saturation, which may be systemic in this part of the licence.
• ●Execution risk is elevated due to the need for further drilling, deepening of wells, and additional seismic work before any commercial production can be established; these activities require significant capital and are subject to technical uncertainty.
• ●Partnering risk is material, as the company explicitly states the need to align with a partner to advance exploration and development, but no partner is yet secured, making future progress uncertain.
• ●Financial disclosure risk exists, as the update provides no absolute revenue, production, or cost figures, limiting visibility into the company's current financial health and ability to fund ongoing work.

Bottom line

The MOU-6 well in Morocco did not produce gas, and the company is now relying on further studies and potential deepening to unlock value from this asset. Technical data confirm poor reservoir quality at this location, with low permeability and gas saturation limiting commercial potential. Predator's operational focus is shifting to Trinidad, where it benefits from a 30% revenue share and reduced tax rate, but no production or revenue figures are disclosed. The Moroccan licence remains a long-term, high-capital project requiring a partner for further advancement. Investors should view this as a technical setback with no immediate value catalyst; progress now depends on successful follow-up studies, partner negotiations, and new drilling results.

Announcement summary

(LSE:PRD) Predator Oil & Gas Holdings Plc provided a preliminary well testing update for the MOU-6 well. The MOU-6 well was successfully perforated under-balanced with 4.5” TCP guns over a 19.8 metre gross upper interval of the TGB-6 Fan from 825.7 to 845.5 metres. The MDT logging tool recorded a formation pressure of 1195 psi at 813.27 metres depth, though this was not fully stabilised. Nitrogen lift operations recovered only diesel and brine, attributed to completion fluid. The company identified several possible reasons for the lack of inflow, including extreme low permeability and low gas saturations, with mechanical blockage also considered possible. Post-well desktop and laboratory studies will investigate these issues further. The final processed NuTech logs for MOU-6 show much lower computed permeability, gas saturations, and porosities compared to MOU-1, MOU-3, and MOU-4, with a close correlation between the logs and observed well performance. MOU-6 has been suspended to allow for potential deepening to the TGB-4 interval. Shallow gas shows up to 2.69% have been sampled for compositional analysis. MOU-6 satisfied the remaining work programme commitment for the First Extension Period of the Petroleum Agreement. Six wells have now been drilled in this previously undrilled frontier area, establishing several new prospective hydrocarbon plays, mainly for the Tertiary, with Jurassic and Triassic intervals remaining to be evaluated. The presence of salt has been established in the area. Further work will focus on evaluating unconventional gas potential, costing a programme to deepen MOU-5 to the Trias for thermogenic gas and helium, and assessing Jurassic potential for gas and possibly oil in the western licence area. The licence area is considered a considerable asset requiring further drilling and 2D and 3D seismic. The company aims to align with a partner capable of advancing exploration and investing in further work. Paul Griffiths, Chief Executive Officer, stated that while MOU-6 did not deliver as hoped, the data collected is invaluable for calibrating gas potential in the area. The operating team is transferring to Trinidad, where preparations for drilling the Snowcap-3 well are underway. The first of two instalments of deferred consideration for the acquisition of the former Challenger Energy Group’s business and assets in Trinidad in 2025 has been completed. In Trinidad, Predator receives 30% of gross sales revenues and can use acquired tax losses to reduce Petroleum Profit Tax from 50% to an effective rate of 12.5%. The company operates under a Master Services Agreement with NABI Construction, which relieves it of operational burdens and costs. Predator Oil & Gas Holdings plc is listed on the Equity Shares (transition) category of the Official List of the London Stock Exchange's main market for listed securities (symbol: PRD).

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