Empire Energy announces Beetaloo operations update - solid progress being made towards commercialisation
- Carpentaria-3H ('C-3H') has been flow tested for 27 days and is currently shut in for soaking (the practice of shutting in a well for a period following fracture stimulation to maximise long-term productivity). Gas production rate has ranged between 2.3 million standard cubic feet per day ('mmcf / day') and 5.7 mmcf / day with an average of 2.6 mmcf / day. Flow rates are yet to be optimized by the shut-in and soaking. Empire believes that higher flow rates will be achieved when the well is reopened.
- Carpentaria-2H ('C-2H') has been brought back online to test the benefit of soaking with excellent results. A sustained average gas flow rate of 3.24 mmcf / day over eight days ('IP8') has been achieved over the 927-metre stimulated horizontal section, approximately 21% higher than the initial IP8 with a lower rate of decline.
- This is a normalised flow rate of 3.5 mmcf / day per 1,000 metres at C-2H, demonstrating that soaking has had a material beneficial impact on flow rates, consistent with productivity improvements seen in other wells in the Beetaloo Sub-basin and in US shale gas basins.
- Empire intends to continue flow testing C-2H to develop an early production type curve that will be incorporated into Empire’s ongoing Front-End Engineering and Design (“FEED”) process. Management is working towards pilot project Final Investment Decision ('FID') this year (subject to financing, gas sales agreement, regulatory approvals and Board approval).
- Petrophysical interpretation of Carpentaria-4V (“C-4V”) data has confirmed that net pay in the Middle Velkerri B is 20% greater and ~150 metres deeper than at the C-2H / C-3H location. C-4V formation evaluation results are being incorporated into the updated independent resource assessment that is expected to be complete in the coming weeks.
- Current cash balance is $18.2 million with recent drilling and stimulation projects coming in well under budget. The $15 million credit facility is available but undrawn. Final Beetaloo Cooperative Drilling Program progress payment of ~$7.6m is expected to be received soon.
- An investor webinar including Q&A will be conducted today at 11am AEDT during which Managing Director Alex Underwood will provide an overview of these results and investors can ask questions.
Comments from Managing Director Alex Underwood:
'The Empire team is highly encouraged by the stabilised flow rates we have achieved at C-2H. At this stage, the rates appear to exceed thresholds that others in the Beetaloo have proposed as being commercial. Empire has high earnings leverage due to the reduced capital costs we enjoy at shallower depths than other parts of the Beetaloo and high net revenue interest (working interest adjusted for royalties) in our Beetaloo properties.
This result has significantly de-risked EP187 and propels us towards a final investment decision on our pilot project later this year. We are rapidly optimising how to drill, stimulate and complete the Middle Velkerri B shale, and expect further improvements as we drill future pilot wells that, along with C-2H and C-3H, will generate production revenue (subject to FEED, sales and transportation agreements, financing, regulatory approvals and FID).
Netherland, Sewell & Associates are due to upgrade our EP187 Contingent Resources including our recent C-4V results. We anticipate a material increase.
C-3H has remaining fluid that the Empire team wants to remove to see the full C-3H well result. We expect soaking to reduce water saturation and to increase gas pressure that will help to remove the remaining fluid, in addition to providing the other matrix gas benefits seen in C-2H.
The global gas market remains in serious structural deficit. New sources of responsibly sourced, low CO2 gas are urgently required to avoid more seasonal price spikes. The IEA recently forecast that LNG demand from the world's largest importer, China, is expected to increase by up to 35% this year as its economy
reopens, but new sources of supply are not coming onstream quickly enough. The NT gas market is undersupplied due to production issues at legacy fields, so our short-term opportunity is to support the NT Government to ameliorate forecast gas shortfalls by bringing our pilot project online quickly.
These flow testing results reinforce our commercialisation strategy.'
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Source: Empire Energy