REG - Beacon Energy PLC - Increase in Reserves Estimate & Operational Update

Beacon EnergyAnnouncement

13/11/2023 07:00

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RNS Number : 2260T  Beacon Energy PLC  13 November 2023

13 November 2023

Beacon Energy plc

("Beacon Energy" or the "Company")

Increase in Company's assessment of Erfelden Best Estimate Reserves to 7.2
mmbbls

Operational 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 an increase in the Company's assessment of
reserves in the Erfelden field incorporating the results of the recently
drilled Schwarzbach-2(2.) ("SCHB-2(2.)") well.

SUMMARY

·    As previously announced, the SCHB-2(2.) well encountered a 34-metre
gross interval containing 28 metres of oil-bearing net reservoirs in the
Pechelbronner-Schichten ("PBS") sandstones within the Stockstadt Mitte segment
of the Erfelden field.

·    These oil-bearing reservoirs were encountered approximately 25 metres
higher and 10 metres thicker than prognosis, with excellent porosities and no
water-bearing sands in the Low Case 42m hydrocarbon column.

·    In addition, following a revised well-to-seismic tie incorporating
the PBS, which was encountered shallower than predicted in the SCHB-2(2.)
well, re-mapping of the 3D seismic data indicates that the Stockstadt Mitte-1
well ("STKM-1") drilled by Exxon in 1986 penetrated the Meletta and Upper PBS
reservoirs in the adjacent Schwarzbach South segment of the field. The
Company's view is that the contingent resources associated with this segment
should be re-categorised as reserves that are justified for development.

·    The re-mapping also shows that there is no clear indication of a
material fault offset between the Stockstadt Mitte segment and the adjacent
Schwarzbach South segment. Beacon believes that there is a high likelihood
that these segments are connected and share a common oil-water contact at
1616mTVDSS, which is supported by the updated mapping, the gas ratios data
from the SCHB-2(2.) well, and the pressure data in the Meletta reservoir in
the STKM-1 well.

·    The Company's updated assessment of potential reserves for these two
now proven and likely connected segments of the central part of the Erfelden
field are:

Low Case :
                4.72 MMbbls

Best Estimate Case:                        7.24 MMbbls

High Case :
                10.20 MMbbls

These new figures are the result of the thicker and higher quality reservoirs
being encountered and the inclusion of reserves in Schwarzbach South.

·    The SCHB-2(2.) well has been tied-back to the wholly-owned
Schwarzbach Production facility to continue well clean-up operations.

·    A rod pump is currently being installed. Commercial production is
expected in the second half of November aided by the rod pump which has the
capacity deliver up to a maximum rate of 250 barrels of oil per day ("bopd").

·    It is expected that once the well is fully cleaned up and production
has been sustained for a period, the rod pump will be replaced with an
Electrical Submersible Pump ("ESP") which has higher capacity. As previously
announced, based on the excellent reservoir properties and the light oil
recovered from the SCHB-2(2.) well, standard oil-industry analysis indicates
that an initial production rate in excess of 900bopd could be achieved with
the installation of an ESP.

 

The original Field Development Plan ("FDP") was to develop the Stockstadt
Mitte segment with two producer wells and a water injector. The Company is
currently undertaking a full-field review to determine how best to develop the
central part of the Erfelden field to optimise the value of the additional
reserves demonstrated by the SCHB-2(2.) well.

A third-party independent Competent Person's Report ("CPR") on reserves will
be commissioned subject to the outcome of the seismic reprocessing trials, a
decision on a seismic reprocessing campaign and the modifications made to the
FDP.

FORWARD PLAN

·    Commercial production from the rod pump currently being installed on
the SCHB-2(2.) well is expected in the second half of November during which
the reservoir is expected to continue to clean-up.

·    The expectation is that the rod pump will be replaced with an ESP in
the middle of the first quarter of 2024 which has the capacity to optimise
initial production from the well. The actual production will determine if any
future interventions are required in this well.

·    Subject to the results of the full-field review, the current FDP is
likely to be superseded by a development programme with more wells over the
central part of the Erfelden field to optimise the value of the additional
reserves demonstrated by the SCHB-2(2.) well and the de-risked Schwarzbach
South segment.

·    An independent third-party CPR will be commissioned based on any
seismic reprocessing and the update to the FDP.

The Company expects to provide a further update on the reservoir clean-up
operation in the SCHB-2(2.) well after establishing a stabilised and sustained
flowrate from the rod pump.

Beacon Energy Chief Executive Officer, Larry Bottomley commented:

"This internal assessment following the drilling of SCHB-2(2.) confirms the
material impact the well has had on our reserve base in both the Stockstadt
Mitte segment of the Erfelden field and the de-risked adjacent Schwarzbach
South segment. As a result of the SCHB-2(2.) well, the Company believes that
the Best Estimate reserves on the Erfelden field have increased from 3.8
mmbbls (pre-drill) to 7.2 mmbbls. The development of both segments that make
up the central part of the Erfelden field will now be incorporated into a
revised field development plan to realise the value from the material upgrade
in the Company's assessment of reserves.

 

"We remain fully focused on bringing SCHB-2(2.) into optimal production as
quickly as possible. We are working hard across all aspects of the subsurface
evaluation and we are undertaking a comprehensive review of the drilling and
completion operations to incorporate these learnings into an updated field
development plan to deliver this additional value.

"We look forward to providing an update on the clean-up and production from
the well 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.

Technical Standard

The technical information in this announcement has been prepared under the
PRMS - Petroleum Resources Management System created by the Society of
Petroleum Engineers, a global standard of petroleum reserve and resource
classification together with guidelines and accepted methodologies for the
definition and estimation of petroleum resources and their monetary valuation.

Qualified Person's Statement

Mr Larry Bottomley, CEO at Beacon Energy, has reviewed and approved the
technical information contained within this announcement, in his capacity as a
qualified person, as required under the AIM rules. Mr Bottomley has over 40
years' experience in the oil and gas industry, prior to which he studied
Geology (BSc.) at Imperial College, University of London, followed by
Stratigraphy (MSc.) at Birkbeck College, University of London.

About the Erfelden Field

The Erfelden oilfield is the most northern oil field in the Upper Rhine
Graben and is comprised of four juxtaposed structural segments: the partially
depleted western part of the Erfelden field (the Kuehkopf segment), the
producing northern part of the Erfelden field (the Schwarzbach Main segment),
and the central part of the Erfelden field comprised of the Stockstadt Mitte
segment, proven by the SCHB-2(2.) well, and the Schwarzbach South segment
proven by the STKM-1 well.

The westerly Kuehkopf segment was discovered by Exxon and produced oil between
1956 and 1985, who also operated the adjacent Stockstadt field. Both
accumulations were discovered, appraised and developed from the subsurface
description from legacy 2D seismic data.

Rhein Petroleum (a wholly-owned subsidiary of Beacon Energy) subsequently
secured the licence (Operator, 100%) and acquired an extensive 3D seismic
survey which led to the discovery of the Schwarzbach Main segment in 2015 when
the Schwarzbach-1 well (SCHB-1) discovered oil in the PBS sandstones in a
North-South trending structural high at the northern end of the Erfelden
Field. This segment is still producing light oil (37-38(o) API) from the
SCHB-1a well through the Schwarzbach Production facility.

Beacon believes that the SCHB-2(2.) well has now proved the commercial
potential of the Stockstadt Mitte segment. Following this well and the update
well-to-seismic tie, re-mapping of the 3D seismic data indicates that the
STKM-1 well drilled by Exxon in 1986 has proven oil in the PBS in the adjacent
Schwarzbach South segment which de-risks this segment. The re-mapping supports
the view that these two segments are connected and comprise the central part
of the Erfelden field, and the recently completed Company review now assigns a
Best Estimate Case reserve of 4.72MMbbls and a High Case reserve of
10.20MMbbls and the intention is to undertake an independent Competent
Person's Report based on these well results and the outcome from any seismic
reprocessing.

The original FDP was to develop the Stockstadt Mitte segment of the field with
two producer wells and a water injector. The Company is currently undertaking
a full-field review to determine how best to develop the central part of the
Erfelden field.  Subject to the results of this review, the current FDP is
likely to be superseded by a development programme with more wells over the
central part of the Erfelden field to optimise the value of the additional
reserves demonstrated by the SCHB-2(2.) well and the de-risked Schwarzbach
South segment.

The drill pad for the initial three wells envisaged in the original FDP was
prepared immediately adjacent to the Schwarzbach Production facility, which is
wholly-owned and operated by the Company, and conductor pipes for each of
these wells were set to a depth of 85m below ground level. A flowline from the
drilling pad to the Schwarzbach Production facility will allow tie-back and
hook-up as these wells are completed and put into production.

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