Update: Technical setback in Albania; resource potential intact
In late October, Petromanas (PMI) announced its decision to temporarily suspend its Molisht-1 well in Albania after experiencing further drilling issues in the problematic lower Flysch shale. PMI/Shell intend to complete the well in H116 with a more powerful rig. The news highlights the difficulties of drilling these deep onshore wells (> 5.5km TD) despite Shell’s experience in analogous plays. The event represents a technical and timing setback, although the resource potential of up to 0.5bnboe in PMI’s licences is unchanged. PMI is seeking to raise funding via asset farm-outs in Albania and France, and possibly equity issuance. We lower our RENAV to C$0.27 (-30%) to reflect the well delay, higher well costs and reclassification of French and Australian assets to “long-term explorationâ€.
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