Falcon Oil & Gas Ltd. - Stellar IP30 Day Flow Rates Advances
the Beetaloo to Pilot Development
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 CO2 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 CO2 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.
- 022624 Falcon Press Release -IP30 Flow Rates Final Version
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