Falcon Oil & gas: Operational update on Beetaloo drilling programme

Operational highlights

Preparations for 2016 Beetaloo Basin, Australia, drilling programme at an advanced stage.

Drilling locations being finalised for the two new vertical wells following technical evaluation undertaken by Origin, Sasol and Falcon.

Well locations to penetrate condensate rich gas mature through to dry gas mature sections of the Middle Velkerri shale.

Drilling expected to start Q2, 2016.

Rig 185 remains 'warm stacked' in the Beetaloo basin.

Tendering and contracting for hydraulic stimulation and key well services ongoing.

Financial highlights

US$3.7 million cash settlement agreed with NIS-received in December 2015.

US$12.7 million (unaudited)in cash and cash on deposit at 31 December 2015.

Australia –2016 drilling and testing preparations underway in the Beetaloo Basin

Preparations are underway for the Group’s 2016 Beetaloo drilling and testing programme, comprising civil construction, the remobilisation of Rig 185 and the drilling of Beetaloo W-1, a vertical well in exploration permit (EP)117 approximately 85km south of the wells drilled in 2016;

the drilling of a second vertical well, the location of which is being finalised and the hydraulic stimulation of either this well or the Beetaloo W-1well; and the re-entry and hydraulic stimulation of Amungee NW-1H in EP98.

This well was drilled in November 2015 to a total measured depth of 3808 m, including 1100 m horizontal section in the ‘B Shale’ interval of the Middle Velkerri Formation, 100 m more than originally planned.

The principal objectives of the 2016 drilling programme are to:

test gas productivity of the Middle Velkerri shale by means of multi stage hydraulic stimulation;

further determine the areal extent of the Middle Velkerri shale;

determine the levels of gas saturation in the southern section of the basin;and

explore the shallower, oil prone sections of the Middle Velkerri shale.

South Africa –processing of the exploration licence by the Petroleum Agencyof South Africa (PASA) continues to progress

The PASA recently confirmed that it expects to finalise a recommendation to the Minister of Mineral Resources on Falcon’s application for a shale gas exploration licence in South Africa’s Karoo Basin, by May 2016. The company expects that the Minister of Mineral Resources will issue Falcon with a licence to explore for shale gas in 2016.

Background

Falcon was granted a Technical Cooperation Permit in 2009 covering 7.5 million (30 327 km²⁾ acres in the southern part of the Karoo Basin. The company has a cooperation agreement (as announced on 12 December 2012) with Chevron Business Development South Africa Limited (Chevron),which enables the Group to work with Chevron for a period of five years in jointly obtaining exploration licences.

Hungary –review of operations

Falcon continues to review its operation and future plans in Hungary, evaluating all options available to the Group to deliver shareholder value. The Group maintains its 100% interest in the Máko Trough.

Broker update

Following the closure of the London office of GMP Securities Europe LLP, engagement with GMP Securities Europe LLP, Falcon’s joint broker has now ended.

Philip O’Quigley, CEO of Falcon commented:

“We are delighted to report that preparations for the 2016 Beetaloo drilling and testing programme are underway. Our shareholders can look forward to another exciting year of exploration activity which has the potential to transform the value of the company. Falcon remains fully carried throughout by our partners Origin and Sasol.”

“Also, we welcome the recent confirmation by the PASA and are optimistic on securing a shale gas exploration licence in South Africa’s Karoo Basin in 2016.

Adapted from a press release by Louise Mulhall

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/09032016/falcon-oil-and-gas-operational-update-on-beetaloo-drilling-programme/