REG - Beacon Energy PLC - Schwarzbach-2(2.) Well Update

Beacon EnergyAnnouncement

11/09/2023 07:00

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RNS Number : 9385L  Beacon Energy PLC  11 September 2023

11 September 2023

Beacon Energy plc

("Beacon Energy" or the "Company")

Schwarzbach-2(2.) Well Update

Rig Release

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

SUMMARY

·    As previously announced, the SCHB-2(2.) well has encountered an
excellent 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
high and 10 metres thicker than prognosis, with porosities averaging 18% in
the Lower PBS and 21% in the Upper PBS, with no water-bearing sands in the 42m
hydrocarbon column.

·    As all these metrics are above or at the top of the range of
pre-drill expectations, the likelihood is that this will result in a material
upgrade to recoverable reserves  in Stockstadt Mitte and a de-risking of 2.4
million barrels of contingent resources already ascribed to Schwarzbach South.

·    Based on these excellent reservoir properties and the light oil
recovered, standard oil-industry analysis indicates that an initial production
rate in excess of 900 barrels of oil per day ("bopd") could be achieved.
Higher rates of production have been achieved on historic wells in the area.

·    Following perforation and acidization, reservoir clean-up operations
commenced on Friday 8 September 2023 and since that time the well has produced
a mixture of oil, gas and drilling fluids.

·    Given delays in the programme the drilling rig must now be released
but clean-up of the well will continue on site.

·    Commercial production is expected to commence from the well aided by
the installation of a rod pump which will have the capacity to deliver up to
250 bopd. This will not require a workover rig. It is expected that once the
well is fully cleaned up and this rate has been achieved, the rod pump will be
replaced with an Electrical Submersible Pump ("ESP") which has higher
capacity.

·    A presentation describing the results of the SCHB-2(2.) is available
as an audiocast at
https://stream.buchanan.uk.com/broadcast/64fda29b84cbf5eec802cc26
(https://stream.buchanan.uk.com/broadcast/64fda29b84cbf5eec802cc26) and on the
Beacon Energy Website www.beaconenergyplc.com (http://www.beaconenergyplc.com)
.

 

FORWARD PLAN

·    Installation of the rod pump is expected to be undertaken during
October. In the interim period reservoir clean-up will continue into the
wellbore.

·    Work will commence immediately to quantify expected reserve and
resources increases.

·    Existing development plans will be updated to reflect learnings from
the SCHB-2(2.) well and increased resource base with the aim of accelerating
drilling and maximising the value of this highly attractive asset.

 

Beacon Energy Chief Executive Officer, Larry Bottomley commented:

"The SCHB2(2.) well has been a challenging well from an operational
perspective, with hole stability issues encountered in the initial and
sidetracked hole sections, however it has encountered an excellent oil-bearing
reservoir with thickness and properties that are far in excess of pre-drill
prognosis.

The data we have gathered during the drilling of the SCHB2(2.) well indicates
the potential for substantial reserve and production upside for the Stockstadt
Mitte segment - up to and potentially more than the High Case (5.8 mmbbls)
outlined in the Company's December 2022 CPR which clearly bodes well for the
long-term value we believe we can realise from the asset.

We believe this well has the potential to deliver at very high rates and
establishing these flowrates through clean-up of the wellbore, and eventual
installation of an ESP is now our top priority although we won't be able to
provide definitive guidance on production expectations until we have completed
the clean-up and artificial lift solutions. At flow rates of 900 bopd, the
Company would expect to deliver operating cash flows in excess of US$1.5
million per month (assuming $80/bbl Brent).

A comprehensive review of the drilling and completion operations and the
technical challenges encountered will be undertaken so that lessons learned
are incorporated into an updated field development plan.

The data provided from the SCHB-2(2.) well will also be incorporated into a
field-wide study to understand the impact on both the risk and quantum of
resources in the Schwarzbach South segment, currently assigned 2C contingent
resources of 2.4mmbbls which will be targeted during the further development
of the Erfelden field.

While the delay to fully understanding the production potential of this well
is frustrating, the sub-surface results far exceed our pre-acquisition and
pre-drilling expectation and we therefore remain pleased with the overall
results of the SCHB2(2.) well and look forward to providing an update in due
course."

 

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 (Joint Broker)               +44 (0)20 7186 9030

 Peter Krens / Ed Haig-Thomas

 Optiva Securities Limited (Joint Broker)                 +44 (0)20 3411 1881

 Christian Dennis

 

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 & 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 mainly
depleted Kuehkopf segment, the producing Schwarzbach Main segment, the
Stockstadt Mitte segment which is the focus on the current development
programme and the unproven Schwarzbach South segment.

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 Oligocene
Pechelbronner-Schichten ("PBS") sandstones in a North-South trending
structural high at northern end of the Erfelden Field. The Schwarzbach Main
segment is still producing light oil (37-38(o) API) from the SCHB-1a well
through the Schwarzbach Production facility.

The Schwarzbach-2(2.) development well (SCHB-2(2.)) has now proved the
commercial potential of this segment. The independent Competent Person's
Report published by the Company in December 2022 assigned 2P reserves of
3.784mmbbls and 3P of 5.754mmbbls to the Stockstadt Mitte segment.

The development plan for the Stockstadt Mitte segment envisages 3 wells - the
SCHB-2(2.) production well and subsequently an additional 2 wells; a producer
and a water injector. The aim is that these additional wells will be drilled
and funded from the free cash flow generated by production from the SCHB-2(2.)
well.

The drill pad for these 3 wells 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.

The Schwarzbach South segment is undrilled, with the 2C Contingent Resources
of 2.4mmbbls described in the CPR now significantly de-risked by the results
of the SCHB-2(2.) well. This forward plan is that this segment will be the
target of future drilling.

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