REG - Beacon Energy PLC - Erfelden Production Update

Beacon EnergyAnnouncement

14/12/2023 07:15

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RNS Number : 7188W  Beacon Energy PLC  14 December 2023

14 December 2023

Beacon Energy plc

("Beacon Energy" or the "Company")

Erfelden Production Update

Beacon Energy (AIM:BCE), the full-cycle oil and gas company with a portfolio
of onshore German assets through its wholly-owned subsidiary, Rhein Petroleum
GmbH ("Rhein Petroleum"), announces a production update on the Erfelden field
following the installation of a rod pump on the Schwarzbach-2(2.)
("SCHB-2(2.)") well.

SUMMARY

·    The rod pump has now been installed on the SCHB 2(2.) well and,
having produced at much higher rates initially, production has now stabilised
at a rate of approximately 40 barrels of oil per day ("bopd").

·    The low production rate indicates that the reservoir near the
wellbore has been invaded with drilling fluids which are restricting flow
rates. This is not uncommon in situations where hole stability issues have
occurred during drilling due to the use of high-density drilling fluids to
stabilise the hole.

·    The well continues to clean-up, albeit currently at a slow rate.
Even at these low flow rates, production is commercial with field revenues
exceeding field operating costs.

·    The Company will undertake industry-standard well stimulation in the
fourth week of  January 2024, which is expected to improve production.

·    The Company is fully funded to undertake the planned well stimulation
in an operation that will take approximately 1 week and which has an estimated
cost of less than €500,000.

·    To date, over 1,600 barrels of oil have been produced through the
Schwarzbach facility since the installation of the rod pump.

 

·    A planned pressure build-up test is currently underway using a
downhole pressure memory gauge that will be recovered prior to the well
stimulation operation. The data from this test will inform our understanding
of  both formation pressure in the oil-bearing reservoir and the "skin"
effect, caused by fluid invasion around the wellbore during drilling, and
which is impeding flow.

 

·    As previously announced, as a result of the SCHB 2(2.) well, the
Company has recently increased its Best Estimate of recoverable reserves on
the Erfelden field from 3.8 million barrels to 7.2 million barrels.

 

·    The Company continues to estimate that given the excellent reservoir
properties and the light oil recovered, and in the absence of an invasion zone
which restricts flowrate, the SCHB 2(2.) well could achieve production in the
region of 900 bopd.

 

·    At those flow rates, the Company would expect to deliver operating
cash flows in the order of US$1.5 million per month (assuming $80/bbl
Brent).

 

Company production, including the contribution from the Company's interest in
the Lauben field, is approximately 70 bopd which makes a material contribution
towards operating costs and G&A.

The Company expects to provide further updates on the clean-up operations, the
well stimulation, and the installation of the ESP as appropriate.

Beacon Energy Chief Executive Officer, Larry Bottomley commented:

"After an extended flow test to allow the well to clean-up and provide us with
the critical data to inform next steps, the SCHB-2(2.) well is now in
commercial production but at lower flowrates than expected given the quality
and thickness of oil-bearing reservoir encountered in the well.  It is not
uncommon for wells to take extended periods of time to clean up and we remain
confident that the well will produce at higher rates either through natural
clean-up during production or once we execute the remedial works.

 

"The SCHB2(2.) well encountered excellent oil-bearing reservoirs with
thickness and properties in excess of pre-drill prognosis, but operational
challenges encountered while drilling has left a legacy of drilling fluids
that have invaded the reservoir near the well bore. These fluids are currently
impeding production. From our analysis, this invaded zone is likely to be less
than 3 metres around the wellbore which we intend to tackle with industry
standard well stimulation techniques.

 

"The principal implication for the lower than expected flowrate is the delay
to the development of the Erfelden field. The SCHB-2(2.) well has demonstrated
a material reserve in the Erfelden field, ranging from 4.7 - 7.2 - 10.2
million barrels in the Low, Best Estimate and High case respectively in the
Company's assessment. We see a significant positive valuation in the region of
$140 million NPV(10) in the Best Estimate Case (management estimate,
assuming $80/bbl Brent) which justifies our continued efforts to realise the
value of this asset.

 

"As previously announced, based on standard oil-industry analysis the Company
estimate that given the excellent reservoir properties and the light oil
recovered, and in the absence of an invasion zone which restricts flowrate,
the SCHB 2(2.) well could achieve production in the region of 900 bopd. The
challenges currently being experienced do not alter our belief in the ultimate
production potential from this well. At those flow rates, the Company would
expect to deliver operating cash flows in the order of US$1.5 million per
month (assuming $80/bbl Brent).

 

"We remain fully focused on establishing optimal production from the
SCHB-2(2.) well as quickly as possible through the rod pump, undertaking well
stimulation and ultimately the installation of the ESP.

 

"We look forward to providing an update on the work-over programme in due
course."

END

Enquiries:

 Beacon Energy plc                                        +44 (0)20 7466 5000

 Larry Bottomley (CEO) / Stewart MacDonald (CFO)

 Strand Hanson Limited (Financial and Nominated Adviser)  +44 (0)20 7409 3494

 Rory Murphy / James Bellman

 Buchanan (Public Relations)                              +44 (0)20 7466 5000

 Ben Romney / Barry Archer / George Pope

 Tennyson Securities Limited (Broker)                     +44 (0)20 7186 9030

 Peter Krens / Ed Haig-Thomas

For further information, please visit  www.beaconenergyplc.com
(http://www.beaconenergyplc.com)   and @BeaconEnergyPlc on Twitter

To register for Beacon Energy's email alerts, please complete the following
form:  https://www.beaconenergyplc.com/media-centre/news/#alerts
(https://www.beaconenergyplc.com/media-centre/news/#alerts)

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018.

 

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