Petrel Energy (ASX: PRL) has encountered oil at its 51%-owned Cerro Padilla 1 well in Uruguay, which is the first ever-confirmed hydrocarbon discovery in the country.
Drilled to an 845m depth, oil shows were confirmed at 793m deep at Cerro Padilla 1, which is the first of four planned wells at the company’s two concessions totalling 3.5-million acres in Uruguay’s Notre Basin.
“While further evaluation is required to understand the full potential of these initial results, the significance of being to first group to discover oil in this frontier basin cannot be underestimated,” Petrel Energy chief executive officer David Casey claimed.
“Although only a modest discovery in its own right, and regardless of the results of production testing, when viewed in the context of what this could mean for the rest of the program and the concessions as a whole, it represents a quantum first step in redefining oil and, potentially, gas prospectivity of the Notre Basin,” Mr Casey added.
The company’s strategy in Uruguay is to drill four wells to gain a better-understanding (quality and extent) of source rock, conventional reservoirs, migration and potential trap integrity, as well as amplitude versus offset anomalies identified in seismic data.
The Australian-based company has an independently certified unrisked prospective resource across its two Uruguay concessions of 1,768 million barrels of oil.
Petrel Energy believes if production from its concessions is successful, it could lead to energy self-sufficiency for Uruguay as well as create export potential. At present, Uruguay imports about 40,000 barrels of oil per day for domestic consumption.
According to the company, the Norte Basin is part of the same oil-producing Devonian basin which extends through to Brazil, Bolivia and Argentina. However, this system has been largely unexplored in Uruguay, which is an emerging target for major energy companies such as BP, BG and Total.
Petrel Energy also has projects in Spain and Canada.
Shares in the company surged 125% by early afternoon trade.