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Mineral Resources Ltd (ASX: MIN), a prominent player in the mining and mining services sector, experienced a downturn in its share price, with a decline of nearly 3% to AU$67.80 in morning trade on Tuesday. The drop in share value can be attributed to the prevailing weakness in the lithium industry, overshadowing some positive developments in another segment of Mineral Resources' operations.
Energy business update
The company provided an update regarding its energy business, particularly concerning the Lockyer-5 conventional gas development well (L-5) located in the onshore Perth Basin. Following an appraisal of the L-5 well, a sidetrack was drilled to a gas development well location, reaching a total depth of 4,574 meters measured depth relative to the rotary table (MDRT). Notably, the Kingia Sandstone objective was successfully intersected at 4,424 meters MDRT.
In a significant development, petrophysical analysis of Lockyer-5 Sidetrack-1 (ST-1) wireline logs yielded "exceptional results," according to company management. The analysis revealed 27 meters of net gas pay with an average porosity of 18%, marking the highest quality reservoir encountered in all wells intersecting the Kingia Sandstone across the onshore Perth Basin.
With preparations underway for a well test scheduled in early April, Mineral Resources aims to evaluate gas flow rates and composition, indicating a promising outlook for its energy business segment.
Looking ahead, following the completion of operations at L-5, Mineral Resources has relocated the drilling rig to North Erregulla-2 (NE-2). Expected to reach a total depth of 3,492 meters MDRT by mid-April, NE-2 serves as an appraisal well to assess the quality and deliverability of the 47 meters net oil pay in the Dongara-Wagina Sandstone discovered in the NED-1 well.
Initial laboratory analysis of the oil recovered in NED-1 has shown promising indicators of high-quality oil, with wireline log analysis indicating an average porosity of 13%. The NE-2 pay zone is set to undergo full coring, followed by a comprehensive suite of wireline testing and a flow test, aimed at further defining and unlocking the substantial oil potential in the region.
Despite the temporary setback in share price, Mineral Resources remains focused on advancing its energy business operations, with promising developments in its gas and oil exploration activities. Investors await further updates on the outcomes of the upcoming well tests, which could potentially drive renewed investor interest and bolster the company's market position.
