Stellar IP30 Day Flow Rates Advances the Beetaloo to Pilot Development
26/02/2024 07:00
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Falcon Oil & Gas Ltd.
(“Falcon” or “Company”)
Stellar IP30 Day Flow Rates Advances the Beetaloo to Pilot Development
26 February 2024 – Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG) is pleased to
announce that the Shenandoah South 1H (SS-1H) well in EP117 achieved
commercial IP30 flow rate of 3.2 MMcf/d (normalised to 6.4 MMcf/d over 1,000
metres), significantly higher than pre-drill expectations.
Highlights are as follows:
* The SS-1H well in EP 117 achieved an average 30-day initial production
(IP30) flow rate of 3.2 million cubic feet per day (MMcf/d) over the
1,644-foot (501 metres), 10 stage stimulated length within the Amungee Member
B-Shale, normalised to 6.4 MMcf/d over 3,281-feet (1,000 metres).
* Results from the SS-1H well significantly exceeded pre-drill expectations
and achieved what Falcon and its partners believe to be above the commercial
threshold required to progress the Beetaloo to pilot development during 2024,
subject to funding and key stakeholder approvals.
* Exit rate trajectory after the 30 days of flow testing showed a steady low
declining curve at 2.9 MMcf/d over the stimulated length (normalised at 5.8
MMcf/d per 3,281 feet) and stable reservoir back pressure of 575 psi.
* The IP30 flow test extrapolates to ~19.5 MMcf/d for proposed future
10,000-foot (3,000 metres) development wells, in line with some of the highest
flow rates achieved in the US Marcellus shale.
* The geological rock properties at SS1-H, indicative of favourable well
performance, met or exceed that of the US Marcellus shale, including reservoir
pressure, effective porosity and gas-in-place. This creates the potential to
result in long-term, low decline gas production, ultimately leading to very
significant estimated ultimate recovery per well (EUR).
* Results to date confirm that this region measuring more than 1 million gross
acres below 8,850 feet (2,700 metres) is one of the best locations in the
Beetaloo Basin to commence pilot development activities.
* Flow testing of the SS-1H well will continue for the next 60 days to achieve
average IP90 flow rates to better determine the well’s EUR. IP90 flow rate
results are expected to be announced in April 2024.
* The Beetaloo JV Partners of Falcon and Tamboran B2 Pty Limited will now
progress development plans for the proposed 40 MMcf/d Pilot Project at the
Shenandoah South location. The project is expected to require six 10,000-foot
development wells initially to achieve plateau production of 40 MMcf/d.
Drilling of the first of these wells is planned to commence in Q2 2024 and the
JV is targeting first gas in H1 2026.
* At the end of January 2024, Falcon held ~US$5 million in cash and has the
benefit of a further A$16.67 million gross (~US$2.5 million net Falcon) carry
to support immediate activities.
* Falcon is funded to commence drilling of the initial two wells in the
program and will evaluate opportunities to support funding the remaining
capital commitments to reach first production, including issuance of equity
and/or debt, evaluation of pre-payment for gas from the proposed pilot project
and potential farm-down opportunities.
Philip O’Quigley, CEO of Falcon commented:
“The IP30 flow rate announced today of 3.2 MMcf/d, normalised to 6.4 MMcf/d
over 1,000 metres, are truly stellar and mark a major turning point in the
Beetaloo Basin. Not only did the results exceed Falcon’s pre-drill
commercial threshold of a normalised flow rate of 3 MMcf/d by more than 100%
but the geological properties evidenced in this part of the Basin, including
reservoir pressure, effective porosity and gas-in-place all point towards the
significant resource potential of the Basin. We will continue flow testing the
well for the next 60 days to achieve an IP90 flow rate which will better
determine what that resource potential is.
We can now look forward with confidence to commencing the proposed 40 MMcf/d
pilot development project which will start with the drilling of the first of
six 10,000 ft development wells in Q2 2024, subject to stakeholder approval
and funding, and look forward to updating the market as those plans begin to
materialise.”
Reminder: Investor Meet today
Philip O’Quigley, Falcon’s CEO, will conduct a Q&A via the Investor Meet
Company platform today 26 February 2024 at 4:00pm (London time).
The event is open to all existing and potential shareholders. Questions can be
submitted at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Falcon
Oil & Gas Ltd. via:
https://www.investormeetcompany.com/falcon-oil-gas-ltd/register-investor
Investors who already follow Falcon Oil & Gas Ltd. on the Investor Meet
Company platform will automatically be invited.
Shenandoah South 1H flow results
The SS-1H well in permit EP 117 successfully achieved IP30 flow rates
following the 10-stage stimulation program within the bottom 501 metres (1,644
ft) of the 1,020-metre (3,346 ft) lateral section in the Amungee Member B-
Shale (depth of c. 9,957ft). The fracture stages had an average interval
spacing of 50 metre (164ft) and the average proppant concentrations of 2,212
lbs/ft across the 10 main stages with a total of over 3.5 million pounds of
sand placed.
Testing was carried out following the installation of production tubing and a
three-week soaking period to allow for water used in the stimulation process
to be absorbed by the shale. The soaking aims to increase the relative
permeability to gas of the formation and enhance production performance.
During the initial draw down period from 25 January to 08 February (13.3 days)
the choke was opened from 16/64 to 40/64 over staged intervals resulting in
gas rates from 12.9 MMcf/d to 3.0 MMcf/d, with flowing wellhead pressures
drawn down from 4,611 to 792 psi. During the subsequent flowing period from 08
Feb – 24 Feb (16.7 days) the choke was opened up to 43/64 at the beginning
of the period, resulting in gas rates from 3.3 to 2.9 MMcf/d, with an average
of 3.0 MMcf/d with flowing wellhead pressures drawn down from 792 to 578 psi.
Total cumulative gas production during the IP30 test was 92.2 MMcf.
The well achieved an IP30 flow rate of 3.2 MMcf/d over the 501 metres (1,644
ft), normalised to 6.4 MMcf/d over 1,000 metres (3,481 ft), and 19.5 MMcf/d
over 3,048 metres (10,000 ft) significantly exceeding Falcon’s normalised
pre-drill expectations and Falcon’s estimated Beetaloo Basin commerciality
threshold.
Table 1: Breakdown of the SS-1H IP30 flow result
SS-1H Rates (MMcf/d) Actual (501m; 1,644 ft) Normalized (1,000m; 3,281 ft) Normalized (3,048m; 10,000 ft)
Average IP30 flow rate 3.2 6.4 19.5
Peak rate 12.9 N/A N/A
IP30 exit rate 2.9 5.8 18.3
Source: Company Data
The SS-1H has demonstrated that the geological rock properties, indicative of
favourable well performance, met or exceed the US Marcellus shale (incl.
reservoir pressure, effective porosity and gas in place). The analysis of the
gas recovered at SS-1H confirms that it is Dry Gas with the following
composition (mole %): Methane 91.7, Ethane 2.8 and CO(2) 3.4. Flow testing has
demonstrated pore pressure gradient of ~0.6 psi/ft, resulting in higher
reservoir pressure at Shenandoah compared to all other Basin wells.
The SS-1H IP30 flow rate delivered the highest normalised rates achieved in
the Beetaloo Basin to date, exceeding the previous normalised IP30 record
achieved by the Tanumbirini 3H well in the Santos-operated EP 161 acreage in
2022. The SS-1H result continues to demonstrate that the deepest regions of
the basin have the most consistent geology and deliver the highest flow rates
and recoverable volumes. The SS-1H IP30 flow rate extrapolated over 10,000ft
(3,048m) of 19.5 MMcf/d compares very favourably with the average US Marcellus
Type Well.
Pilot Development Program
The results from the SS-1H well give the Beetaloo JV confidence to progress to
the proposed 40 MMcf/d Pilot Project 9 MMcf/d net Falcon) in the Shenandoah
South region. The JV is targeting first production from the project in H1
2026, which is expected to deliver volumes into the Northern Territory gas
market over a 10-year plateau period, subject to completion of a binding Gas
Sales Agreement, funding and key stakeholder approvals.
The program is expected to include six development wells drilled to 10,000
feet to achieve plateau production, the construction of the 40 MMcf/d Sturt
Plateau Compression Facility (SPCF) and the 35-kilometre Sturt Plateau
Pipeline (SPP) connecting the SPCF to the APA-owned Amadeus Gas Pipeline.
Additional wells will be required over the project life, which are expected to
be funded from future project cash flow.
Liberty Energy Inc (NYSE: LBRT), a leading North American energy services firm
with significant operational and subsurface engineering expertise, plans to
import a modern frac fleet into the Beetaloo Basin in 2024 to support the
Shenandoah South Pilot Programme stimulation campaign. Liberty plans to
dedicate a frac fleet and crew to the Beetaloo to reduce any potential for
delays in mobilising equipment to site and increasing completion efficiencies
while reducing costs of future stimulation programs. Liberty’s presence in
the Basin follows on from the previously announced similar arrangement with
Helmerich and Payne (H&P), the largest drilling solutions provider in the US,
whereby H&P imported a 2,000HP rig into the Beetaloo, which is expected to
support a material reduction in drilling times and costs.
Ends.
CONTACT DETAILS:
Falcon Oil & Gas Ltd. +353 1 676 8702
Philip O’Quigley, CEO +353 87 814 7042
Anne Flynn, CFO +353 1 676 9162
Cavendish Capital Markets Limited (NOMAD & Joint Broker)
Neil McDonald / Adam Rae +44 131 220 9771
Tennyson Securities (Joint Broker)
Peter Krens +44 20 7186 9033
This announcement has been reviewed by Dr. Gábor Bada, Falcon Oil & Gas
Ltd’s Technical Advisor. Dr. Bada obtained his geology degree at the
Eötvös L. University in Budapest, Hungary and his PhD at the Vrije
Universiteit Amsterdam, the Netherlands. He is a member of AAPG.
About Falcon Oil & Gas Ltd.
Falcon Oil & Gas Ltd is an international oil & gas company engaged in the
exploration and development of unconventional oil and gas assets, with the
current portfolio focused in Australia. Falcon Oil & Gas Ltd is incorporated
in British Columbia, Canada and headquartered in Dublin, Ireland..
Falcon Oil & Gas Australia Limited is a c. 98% subsidiary of Falcon Oil & Gas
Ltd.
For further information on Falcon Oil & Gas Ltd. Please visit
www.falconoilandgas.com
About Tamboran B2 Pty Limited
Tamboran (B1) Pty Limited (“Tamboran B1”) is the 100% holder of Tamboran
B2 Pty Limited, with Tamboran B1 being a 50:50 joint venture between Tamboran
Resources Limited and Daly Waters Energy, LP.
Tamboran Resources Limited, is a natural gas company listed on the ASX (TBN)
and U.S. OTC markets (TBNNY). Tamboran is focused on playing a constructive
role in the global energy transition towards a lower carbon future, by
developing the significant low CO(2) gas resource within the Beetaloo Basin
through cutting-edge drilling and completion design technology as well as
management’s experience in successfully commercialising unconventional shale
in North America.
Bryan Sheffield of Daly Waters Energy, LP is a highly successful investor and
has made significant returns in the US unconventional energy sector in the
past. He was Founder of Parsley Energy Inc. (“PE”), an independent
unconventional oil and gas producer in the Permian Basin, Texas and previously
served as its Chairman and CEO. PE was acquired for over US$7 billion by
Pioneer Natural Resources Company (“Pioneer”), itself a leading
independent oil and gas company and with the PE acquisition became a Permian
pure play company. Pioneer has a current market capitalisation of c. US$60
billion.
About Beetaloo Joint Venture (“JV”) (EP 76, 98 and 117)
Company Interest
Falcon Oil and Gas Australia Limited 22.5%
Tamboran B2 Pty Limited 77.5%
Total 100.0%
Advisory regarding forward looking statements
Certain information in this press release may constitute forward-looking
information. Any statements that are contained in this news release that are
not statements of historical fact may be deemed to be forward-looking
information. Forward-looking information typically contains statements with
words such as “may”, “will”, “should”, “expect”, “intend”,
“plan”, “anticipate”, “believe”, “estimate”, “projects”,
“dependent”, “consider” “potential”, “scheduled”,
“forecast”, “outlook”, “budget”, “hope”, “suggest”,
“support” “planned”, “approximately”, “potential” or the
negative of those terms or similar words suggesting future outcomes. In
particular, forward-looking information in this press release includes, but is
not limited to, information relating to the IP30 flow rate of 3.2 MMcf/d over
the 501 metre, belief that the results to be above the commercial threshold
required to progress the Beetaloo to pilot development during 2024, exit rate
trajectory showing a flat curve at ~2.9 MMcf/d over the stimulated length and
stable WHP of 575 psi, IP30 flow test extrapolation to ~19.5 MMcf/d for
proposed future development wells, geological rock properties in the region
indicative of favourable well performance with potential to result in
long-term, low-declining gas production, that this region is one of the best
locations in the Beetaloo Basin to commence pilot development activities, flow
testing of the SS-1H well will continue for the next 60 days to achieve
average IP90 flow rates to better determine the well’s EUR, IP90 flow rate
results expected to be announced in April 2024, development plans for the
proposed 40 MMcf/d Pilot Project at the Shenandoah South location including
six 3,048 metre development wells initially to achieve plateau production of
40 MMcf/d, drilling of the first of these wells planned to commence in Q2 2024
and the targeting of first gas in H1 2026, funding to commence drilling of the
initial two wells in the program and evaluation of opportunities to support
funding the remaining capital commitments to reach first production, including
issuance of equity and/or debt, evaluation of pre-payment for gas from the
proposed Pilot Project and potential farm-down opportunities
This information is based on current expectations that are subject to
significant risks and uncertainties that are difficult to predict. The risks,
assumptions and other factors that could influence actual results include
risks associated with fluctuations in market prices for shale gas; risks
related to the exploration, development and production of shale gas reserves;
general economic, market and business conditions; substantial capital
requirements; uncertainties inherent in estimating quantities of reserves and
resources; extent of, and cost of compliance with, government laws and
regulations and the effect of changes in such laws and regulations; the need
to obtain regulatory approvals before development commences; environmental
risks and hazards and the cost of compliance with environmental regulations;
aboriginal claims; inherent risks and hazards with operations such as
mechanical or pipe failure, cratering and other dangerous conditions;
potential cost overruns, drilling wells is speculative, often involving
significant costs that may be more than estimated and may not result in any
discoveries; variations in foreign exchange rates; competition for capital,
equipment, new leases, pipeline capacity and skilled personnel; the failure of
the holder of licenses, leases and permits to meet requirements of such;
changes in royalty regimes; failure to accurately estimate abandonment and
reclamation costs; inaccurate estimates and assumptions by management and
their joint venture partners; effectiveness of internal controls; the
potential lack of available drilling equipment; failure to obtain or keep key
personnel; title deficiencies; geo-political risks; and risk of litigation.
Readers are cautioned that the foregoing list of important factors is not
exhaustive and that these factors and risks are difficult to predict. Actual
results might differ materially from results suggested in any forward-looking
statements. Falcon assumes no obligation to update the forward-looking
statements, or to update the reasons why actual results could differ from
those reflected in the forward looking-statements unless and until required by
securities laws applicable to Falcon. Additional information identifying risks
and uncertainties is contained in Falcon’s filings with the Canadian
securities regulators, which filings are available at www.sedarplus.com,
including under "Risk Factors" in the Annual Information Form.
Any references in this news release to initial production rates are useful in
confirming the presence of hydrocarbons; however, such rates are not
determinative of the rates at which such wells will continue production and
decline thereafter and are not necessarily indicative of long-term performance
or ultimate recovery. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for Falcon.
Such rates are based on field estimates and may be based on limited data
available at this time.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon publication of this announcement, this inside information is
now considered to be in the public domain.
Attachment
* 022624 Falcon Press Release -IP30 Flow Rates Final Version
(https://ml-eu.globenewswire.com/Resource/Download/16923dfb-a893-418c-96c8-0ed8b18363bc)