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Date : 05/04/2022

Mineral Resources (ASX: MIN) shares surge following gas discovery in Lockyer Deep-1 Well Test

Mineral Resources Limited (ASX: MIN) is a significant mining services company located in Perth, Western Australia, emphasising the iron ore and hard-rock lithium sectors. Since its listing on the Australian Securities Exchange in 2006, Mineral Resources has become one of the best-performing contractors on the ASX by combining technical expertise with an innovative strategy to create remarkable results.

Mineral Resources Limited (ASX: MIN) has provided an update on Lockyer Deep-1 Well Test. As soon as the news hit the market, MIN shares price surged in the market.

MIN stock is trading at $50.19, gaining more than 2% from the previously closed value. The stock’s trading volume was around 2.12 million shares, and the company’s current market cap is approximately 9.46 Billion AUD.

MIN: 1H22 Key Financials

The company had recently announced its financials for the first half of 2022, and the results fell short of market expectations.

mineral resources limited asx

  1. Mineral Resources Limited’s revenue in the first half of 2022 was around $1.35 billion. It is 12% less than the revenue of $1.5 billion in the first half of 2021.
  2. The company reported a net profit of $19.2 billion in 1H22, losing more than 96% from the NPAT of 1H21. MIN NPAT in 1H21 was $519 million.
  3. Its EPS declined by 96% to reach $0.10 in 1H22. In the first half of 2021, the company announced an EPS of $2.76
  4. During the first half of the fiscal year 2022 ending 31 December 2021, Mineral Resources earned EBITDA of $156 million.
  5. As of 31 December 2021, the company had cash and cash equivalents of $0.8 Billion.

MIN: Results from the Lockyer Deep-1 Well Test

Mineral Resources Limited (ASX: MIN) announced the completion of well testing operations at the Lockyer Deep-1 (LD1) conventional gas exploration well, situated on Exploration Permit EP368 in Western Australia’s northern Perth Basin. On Friday, 25 March 2022, the first well testing was completed. According to the report:

  1. There is a 117 mmscf/d maximum gas flow rate from the well.
  2. The Kingia Sandstone’s conventional reservoir quality and well-delivery capabilities are exceptional.
  3. Low impurities of CO2 (less than 4%) and hydrogen sulphide (less than 3 ppm) characterise the findings.
  4. The recovered condensate had a preliminary condensate gas ratio (CGR) of 5-6 bbl/mmscf when brought to the surface.

The Kingia Sandstone well test programme followed the preceding LD1 drilling campaign, which reached a total depth of 4,274 metres in September 2021 and aimed to verify well deliverability, reservoir quality, and gas composition across a 25-meter interval.

Min Res MD’s Remarks

Managing Director Chris Ellison said that the Lockyer Deep-1 test results had confirmed our expectations about well reliability, quality of the reservoir, and the composition of gas from the wells we have been drilling. We will now conduct further drilling as part of our continuing resource review.

Mineral Resources, our Joint Venture partners, and our Tier 1 customers will be able to switch from dirty diesel to cleaner natural gas if Lockyer Deep is built, making it easier to achieve Net Zero Emissions by 2050. Additionally, the corporation will look into potential downstream gas production options.

What Next?

The LD1 well test will continue to operate for a few more days to collect further reservoir performance data before being shut down. After that, the well will be finished as a potential producer.

Drilling more wells and obtaining seismic data over a 12 to 18 month period will be the following phases in the exploration and appraisal programme, which will help to characterise the resource further.

Conclusion

It is a big discovery for the company, and when executed, it will result in a continuous supply of gas for the company and its allies. Iron ore and lithium prices have increased significantly in the past few months. For instance, iron ore prices have increased by more than 73% since November 2021. Also, lithium carbonate is currently trading at 497.5K Chinese Yuan per tonne. All these factors have positively affected the business and stock price of Mineral Resources.

 

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