Analysis of testing acquired to date from the extended production test has confirmed the formation water is being produced from either a flow path to the aquifer behind the production casing and within the wellbore; or a high permeability, high angle fracture with direct access to the aquifer associated with this well location.

Nido said neither scenario was uncommon in fractured vuggy carbonate reservoirs and could be mitigated with a workover, currently anticipated before the end of August.

The workover will be carried out by the jack-up drilling rig Aquamarine Driller, which is currently carrying out the extended production test, reducing the operational risk, cost and schedule impact of the workover.

Nido has also started mobilising equipment to the site, saying a successful workover would increase oil production.

The company added the well testing had also confirmed the pre-production in-place reserves of about 11 million barrels of oil in a 135-140m oil column.

Current production at Tindalo-1 is about 16,000-18,000 barrels of liquids per day with oil production averaging 4000-5000bpd over the last two weeks.

Shares in Nido were unchanged at 14c while Kairiki was down 1.45% in morning trade to 6.8c.