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 the in Beetaloo Basin, Northern Territory,Australia. 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 eermits 98,76, and 117 covering the majority of the Beetaloo Basin.
Map of well locations
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.
Kalala S-1 & Amungee NW-1 Wells
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 3%-4% 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.
Results of the 2016 Exploration Drilling and Testing Program
- Continuation of the regionally pervasive Middle Velkerri formation approximately 85 kilometers soth of the Kalala S-1 and Amungee NW-1H wells
- A Gross interval of over 570 meters shale gas sequence with net pay exceeding 150 meters
- Excellent gas shows at two prospective shale sweet spots at the top and base of the Middle Velkerri formation, comparable to those encountered during 2015 drilling programme
- The Lower Kyalla formation, considered as a secondary shale target, provided excellent gas shows within a 150 meter thick liquid rich squence
Amungee NW-1 Horizontal Well
- 11 Hydraulic stimulation stages completed along the 1.000 meter horizontal section
- Stimulation treatments executed, with 95% if programmed proppant placed
- Main physical properties are:
- thickness of 30 meters
- between 4.0% - 7.5% porosity
- a gas saturation range of 50% - 75%
- permeability between 50 amd 500 nano-Darcy
- Extented Flow test gas flow rates range between 0.8-1.2 MMscf/d
- Initial estimates suggest a dry gas composition with 95% methane
- Declaration of Discovery
An extended production test (“EPT”) was completed on Amungee NW-1H in December 2016
- Initial production over the first 30 days averaged 1.11 MMscf/d
- 63 MMscf was produced over the 57 days of the EPT, at an average rate of 1.10 MMscf/d
- The final rate of the EPT was 1.07 MMscf/d
- Completed in line with a regulatory approved plan with no environmental incidents
- The EPT concludes the 2016 drilling programme
- A final discovery report is being prepared for submission to the Northern Territory Government’s Department of Primary Industry and Resources in Q1 2017
Amungee NW-1 Horizontal well drilled during 2016