Magnum Gas and Power (ASX:MPE) has mobilised the drill rig and is drilling as we speak.
The drill rig was mobilised at its Tulainyo 2-7 gas appraisal well in California’s Sacramento Basin.
Drilling is expected to take less than a month and results will flow shortly after.
The $9.6 million capped company has a 20% stake in this project, but the size of the potential prize to the company could be $1.2 billion.
Results from the drilling should be in by mid-December and if they are positive, MPE will be looking to repeat the history of its JV partner, which has already experienced significant success in the Sacramento Basin.
Its partner is California Resources Production Corporation (NYSE:CRC), a subsidiary of a NYSE-listed company, which is none other than California’s largest natural gas producer.
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In 2015, CRC produced 44 million cubic feet of natural gas (or 7,000 barrels of oil equivalent per day) in the Sacramento Basin, which could supply all the homes in the City of Sacramento for nearly two years.
Given the current gas situation in California, and upwardly moving oil prices, the $9 million capped MPE will be in a strong position to capitalise.