Falcon Oil & Gas Australia Limited (ABN 53 132 857 008) (''Falcon Australia'') is a 98% owned subsidiary of Falcon Oil & Gas Ltd (''Falcon'')
Falcon Australia is an unlisted public company engaged in the exploration and development of world class conventional and unconventional oil & gas resources in Beetaloo Basin, Northern Territory. The Beetaloo Basin is a Proterozoic and Cambrian age tight oil and gas basin that the Board believes is well suited for unconventional oil and gas projects.Connected to the major industrial and export markets in Darwin 600km ti the north, Falcon Australia us uniquely positioned in the Northern Territory to achieve commercial production. Existing infrastructure includes a major highway, two gas pipelines and a railway.
Falcon Australia holds 30% interest in 4.6 million gross acres in Exploration Permits 98,76, and 117 covering the majority of the Beetaloo Basin.
2014 to 2016 Activity
2014 Transformational Farm out of Beetaloo unconventional acreage
On 21 August 2014Falcon Australia completed the Farm-Out Agreement and Joint Operating Agreements (collectively “the Agreements”) with Origin Energy Resources Limited, a subsidiary of Origin Energy Limited (“Origin”) and Sasol Petroleum Australia Limited, a subsidiary of Sasol Limited (“Sasol”), collectively referred to herein as “the Farminees”, each farming into 35% of Falcon’s Exploration Permits in the Beetaloo Basin, Australia (“the Permits”).
Key transaction details were:
- Falcon retained a 30% interest in the Permits.
- Falcon received A$20 million cash from the Farminees.
- Origin appointed as Operator with immediate effect.
- Farminees to carry Falcon in a nine well exploration and appraisal program between 2015 to 2018, detailed as follows:
- 3 vertical exploration/stratigraphic wells and core studies;
- 1 hydraulic fracture stimulated vertical exploration well and core study;
- 1 hydraulic fracture stimulated horizontal exploration well, commercial study and 3C resource assessment; and
- 4 hydraulic fracture stimulated horizontal exploration/appraisal wells, micro-seismic and 90 day production tests.
- Drilling/testing specifically targeted to take the project towards commerciality.
- Farminees will pay for the full cost of completing the first five wells estimated at A$64 million, and will fund any cost overruns. This drilling programme commenced in 2015.
- Farminees to pay up to the full cost of the next four horizontally fracture stimulated wells, 90 day production tests and micro seismic with a capped expenditure up to A$101 million, any cost overrun funded by each Party in proportion to their working interest.
- As part of the agreements to reduce the overriding royalties from what was originally 12% to 1%, Farminees will pay their pro-rata share (US$14 million (approx. A$15 million)) of the two five year call options entered into by Falcon as part of agreements announced on 1 November 2013 with CR Innovations AG and 17 December 2013 with the TOG Group, should Farminees and Falcon decide to exercise the call options.
- Farminees may reduce or surrender their interests back to Falcon only after:
- the drilling of the first five wells or
- the drilling and testing of the next two horizontally fracture stimulated wells.
Map of well locations
Kalala S-1 Well drilled during 2015
Results of the 2015 Exploration Drilling and Testing Program
- 2015 saw the drilling of two vertical wells, Kalala S-1 and Amungee NW-1 along with the first horizontal well, Amungee NW-1H. All wells targeted the Middle Velkerri formation to assess hydrocarbon saturation and reservoir quality.
- The Middle Velkerri and Kyalla shales offer stacked play fairways with continuity over a large proportion of the Beetaloo Basin and in various maturity windows (dry gas to liquid).
- Three pervasive, organic rich shale intervals were identified and characterised within the Middle Velkerri formation with excellent reservoir and completion quality. The identified “B” and “C” shales have thickness in excess of 40 meters each.
- Amungee NW-1H, the first horizontal well in the programme landed in the Middle Velkerri “B” shale encountering excellent gas shows and represents a highly prospective candidate for multi-stage hydraulic fracture stimulation.
- Core analysis confirmed that the Middle Velkerri shale is organic rich, with average total organic carbon of 2.5%-5% and is gas saturated.
- Diagnostic fracture injection test data revealed that the Middle Velkerri shale is 20% -25% overpressured, which is encouraging from both a volumetrics and reservoir productivity perspective.
- Favourable geomechanics indicates good frackabability within the Middle Velkerri shale.
- Estimated gas in-place density ranges within the Middle Velkerri shales are comparable to successful North American shale plays.
2016 Exploration Drilling and Testing Program
- Re-entry of the horizontal Amungee NW-1H well to run casing commenced in June 2016.
- The casing of Amungee NW-1H will be followed by a multi-stage fracture stimulation programme to test the Middle Velkerri “B” shale reservoir, with a subsequent 90 day production testing program.
- Civil works at the Beetaloo W-1 well commenced mid-May 2016 and once the rig is released from Amungee NW-1H spudding will commence on Beetaloo W-1.
- The regulatory approval process for the drilling of a second vertical well within EP-98 is ongoing with spudding of the well scheduled immediately post the drilling of the Beeetaloo W-1 well.
- A multi-stage fracture stipulation programme will then be performed on one of the two vertical wells drilled in 2016.