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Armour Energy Spins Bit at Latest Aussie Well; Targeting Snake Creek Shale

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   |    Tuesday,June 12,2018

[Summary: Armour has reported an update on its drilling ops at the Myall well onshore Australia.

The intermediate  8‐1/2”  section  of  Myall  Creek  4A  Well  has  been  successfully  drilled  to  1913  metres measured depth and 7” casing set and cemented in the Triassic Snake Creek Shale seal. 

The well was spudded in Armour’s 100% owned PL511 in Queensland on May 30, 2018.  Ensign drilling rig 964 is currently drilling ahead in the 6‐1/8” production hole to a planned measured depth of 2414 metres, following which 4‐1/2” casing will be set and cemented.

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ORIGINAL RELEASE:

The  Directors  of  Armour  Energy  Ltd  (ASX:  AJQ)  wish  to  update  the  market  and  advise  that  the intermediate  8‐1/2”  section  of  Myall  Creek  4A  Well  has  been  successfully  drilled  to  1913  metres measured depth and 7” casing set and cemented in the Triassic Snake Creek Shale seal.  The well was spudded in Armour’s 100% owned PL511 in Queensland on May 30, 2018.  Ensign drilling rig 964 is currently drilling ahead in the 6‐1/8” production hole to a planned measured depth of 2414 metres, following which 4‐1/2” casing will be set and cemented.

Armour has designed the Myall Creek 4A wellbore to enable a multi‐stage hydraulic stimulation of the prognosed 300 metre gross hydrocarbon charged section below the regional Triassic Snake Creek Shale seal.   The design provides for multiple reservoirs within the Triassic and Permian gross hydrocarbon section,  historically  produced  on  a  stand‐alone  basis,  to  be  simultaneously  produced  in  a  single wellbore.  This  allows  maximisation  of  production  rates  and  recovery  of  an  estimated  4.4PJ  of  gas, 44,000 barrels condensate and 9,000 tonnes LPG1  (Figures 1 & 2).

Armour has carried out extensive analysis of previous drilling and completions strategies used in the Permian  and  Triassic  sections  of  the  Roma  Shelf,  and  aims  to  optimise  future  production  rates, minimise well bore and reservoir formation damage and deliver reduced decline rates by adopting the following strategies:

1.      Casing  and  cementing  off  historically  non‐productive  sections  above  the  Triassic  and  Permian sections, and sealing off all aquifers from the well bore.

2.      Placing production casing over the prognosed gas saturated, 300 metre thick Triassic and Permian section.

3.      Comprehensive  logging  suites  in  combination  with  gas  detection  mud  logs  of  the  prospective sandstone bearing Permian Tinowon and Triassic Rewan Formations.

4.      Perforations in the production casing will be designed over the best areas with a focus on the most suitable sandstones with the highest hydrocarbon response on the Mudlog.

5.      Hydraulic stimulation of gas saturated zones in stages will be designed to maximise production rates, minimise well bore damage and minimise production decline rates.  Armour envisages two stimulations (over 40 meters each) in the Permian section sandstones each using approximately

90,000 pounds of proppant andplus a third stage (over 100 meters) in the Triassic sandstones using approximately 200,000 pounds of proppant.

6.      Following  the  multi‐stage  hydraulic  stimulation,  the  well  will  be  flow  tested.   Planned  2‐3/8” production tubing capable of maximum 10 million cubic feet per day production with a choke would be installed to maximise production over the life of the well with little or no need for future intervention.

7.      In  tandem  with  the  planned  completion  of  the  Myall  Creek  4A  well,  a  4”  pipeline  would  be installed  to  deliver  product  to  the  Myall  Creek  compressor  station  where  a  new  manifold  is planned to be installed to take an additional five wells, including the Myall Creek 4A well.

8.      Upon completion of the installation of production tubing and gathering pipelines, hydrocarbon production from the well will be utilised immediately for sale.

Armour is currently producing 9 TJ per day and has 61.7 PJ of 2P gas reserves across the Kincora Project and 169 PJ of 3P reserves (refer Table 1 below).

Armour Energy has successfully met all reported key milestones to date at the Kincora Gas Project, beginning with the restart of the Newstead Gas Storage Facility to commission the dry gas stream of the  previously  moth‐balled  Kincora  Gas  Plant  and  the  sales  gas  pipeline  to  Walumbilla.     This achievement allowed Armour to commence sales of 5 TJ per day of gas.

Restart of the dry gas circuit was followed by recommissioning of the wet gas stream of the Kincora Gas Plant, along with field gathering facilities and associated field wells. This achievement allowed production and sales of gas to be increased to 9 TJ per day of gas, plus sales of associated LPG and condensate.  Gas sales have now been consistent at 9 TJ per day for 4 months .

In tandem with these milestones, Armour is also the successful tenderer for two competitive tender areas  released  by  the  Queensland  Government,  ATP(A)  2030  and  2032,  and  is  pleased  to  see  the continued  confidence  that  the  Queensland  Government  has  in  the  Company’s  ability  to  rapidly appraise and potentially develop these new project areas to provide part of the required solution for new gas supply to domestic customers in the east coast market.

Armour was advised in late March that it was a successful applicant for a $6 million cost‐contribution grant from the Federal Government’s Gas Acceleration Program (GAP) to assist with the drilling of 4 wells on the Roma Shelf in order to support the acceleration of domestic gas supply for increasing demand in east Australian gas markets, the first of which is the Myall Creek 4A well.  Documentation of the funding agreement to give effect to the grant is being progressed.


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