Falcon Oil & Gas Ltd (LON:FOG) investors can look forward to another exciting year of exploration activity, according to chief executive Philip O’Quigley.
His comments come in a detailed update on the group’s Australian shale discovery, highlighting that follow on analysis of the well drilled in 2015 has confirmed the positive early indications.
Falcon also provided details of drilling plans for 2016.
Recommissioning of Rig 185, stored at the Amungee NW-1H well site, is expected in mid-May with the well scheduled for re-entry in June.
Thereafter Amungee NW-1H, a horizontal well, will then undergo a multi-stage fracture stimulation programme to test the Middle Velkerri ‘B’ shale reservoir.
The objective is to test the productivity of the gas in the shale.
Civil works are due to begin at planned location of the Beetaloo W-1 well in mid-May, which the well’s spudding anticipated in the third quarter of 2016. Preparations, including seeking regulatory approval, are ongoing so that a second vertical well can be spudded immediately after the completion of Beetaloo W1.
The Beetaloo W-1 vertical well are designed to confirm that the Middle Velkerri shale gas play extends towards the southern part of the Beetaloo basin. The W-1 well is to be located about 85 kilometres south of the Kalala S-1 and Amungee NW-1H wells
The second vertical will aim to test the shallower condensate rich gas mature sections of the Middle Velkerri shale on the northern basin flank, some 35 kilometres north of Kalala S-1 and Amungee NW-1H.
Falcon’s share of drilling costs continue to be carried by its joint venture partners, Origin Energy and Sasol.
“Falcon's shareholders can look forward to another exciting year of exploration activity which has the potential to transform the value of your company,” O’Quigley said.
He highlighted that the in-depth shale evaluation program and petrophysical analysis carried out on the three 2015 wells had confirmed that Beetaloo is a highly prospective basin.
The company told investors that the analysis shows that the iddle Velkerri and Kyalla shales offer stacked play fairways with continuity over a large proportion of the Beetaloo Basin and in various maturity windows (dry gas to liquid).
It identified three ‘pervasive, organic rich’ shale intervals within the Middle Velkerri formation, and those intervals have ‘excellent’ reservoir and completion quality.
Amungee NW-1H, the first horizontal well in the programme, landed in the Middle Velkerri B shale and saw excellent gas shows, the company added. That meant the well was a highly prospective candidate for multi-stage hydraulic fracture stimulation.
Analysis of core confirmed the Middle Velkerri shale to be organic rich, with average total organic content (TOC) of 3%-4% and gas saturated.
Evaluation by a diagnostic fracture injection test (DFIT) showed the Middle Velkerri shale is 20% -25% overpressured. Falcon explained that this result is encouraging from both a volumetrics and reservoir productivity perspective.
Geomechanics indicate ‘good frackabability’ within the Middle Velkerri shale.
And it is estimated that gas in-place density is comparable to the successful shale plays seen in North America.
Falcon Oil & Gas shares moved 4% higher in early deals to trade at 8.88p,