Aim-quoted oil firm Leni Gas & Oil (LGO:AIM) gains 28.6% to 3.89p with a second development well on the Goudron field onshore Trinidad on course to match the success of the first. The company says it will mobilise a second drilling well to Goudron in order to accelerate the current 30-well programme.
Today's announcement reveals the GY-665 well intersected 687 feet of gross oil bearing sands in its primary target the Gros Morne formation. An early end to drilling will mean it can be brought on production more rapidly. The previous GY-664 well flowed at 326 barrels of oil per day or more than three times what analysts were predicting.
A deeper secondary target, the Lower Cruse formation, will be tested in one of the subsequent three wells planned to be drilled from the same site. The market has reacted to these catalysts and the share price is up 342% since the first reports from GY-664 were received.
House broker Old Park Lane Capital reiterates its 'buy' recommendation and put its price target under review. Analyst Barney Gray comments: 'The indications gained from drilling in the Gros Morne have given LGO the confidence to complete GY-664 as a producer without deepening the well into the Lower Cruse formation.
'In addition, exploiting the potential of the shallower yet thicker than expected Goudron Sandstones and employing a second drilling rig will greatly accelerate future production as shallower formations in new wells can be brought on stream rapidly.'