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Falcon Spuds First Beetaloo Basin Well of 2015

Share Print Bookmark    |    Wednesday,July 15,2015

Falcon Oil & Gas Ltd. has reported the spudding of the Kalala S-1 well in the Beetaloo Basin, Australia.

Kalala S-1 is the first of Falcon's fully funded and uncapped, 2015 three well drilling and evaluation programme in the Beetaloo Basin. The 2015 three well programme is the commencement of a nine well exploration and appraisal programme planned from 2015 to 2018.

Highlights:

• Kalala S-1 is the first well of the initial 2015 three well fully funded drilling programme, targeting the Middle Velkerri formation to assess hydrocarbon saturation and reservoir quality.
• Kalala S-1 is located within exploration permit 98, with access from the existing Carpentaria Highway, and will be drilled to a total depth of approximately 2,800 meters.
• Rig 185, an ATS 400 has been commissioned from Saxon Energy Services Australia Pty. Ltd, a Schlumberger company.
• It is estimated that drilling will take approximately 35 to 50 days.
• Kalala S-1 is to be operated by Origin Resources Limited (35%) with partners Sasol Petroleum Australia Limited (35%) and Falcon (30%).

Falcon is fully carried for all 2015 drilling and evaluation costs, retaining its 30% interest in 4.6 million gross acres of the Beetaloo Basin with co-venture partners Origin and Sasol.

The principal objectives of the 2015 three well drilling programme are to:

• penetrate the Middle Velkerri formation to assess hydrocarbon saturation and reservoir quality;
• evaluate oil versus gas maturity and determine the most prospective areas and depth window;
• provide further information on the aerial distribution of the target Middle Velkerri formation; and
• collect data points for subsequent vertical/horizontal drilling, completion and production testing.

Formation evaluation and reservoir characterisation will be carried out from these initial three wells through petrophysical interpretation, core analysis, geomechanical studies and stimulation design.

Philip O'Quigley, CEO of Falcon commented: "The spudding of Kalala S-1 well is an important milestone for the Company and marks the start of our initial three well fully funded 2015 drilling campaign. The initial drilling programme is designed to test the hydrocarbon saturation and reservoir quality of the basin and determine the prospectivity of this highly attractive basin. We will update the market as soon as results become available."

Background

On 2 May 2014, Falcon announced it had entered into a Farm-Out Agreement and Joint Operating Agreement with Origin and Sasol with each farming into 35% of the Falcon's exploration permits in the Beetaloo Basin, Australia through its 98% subsidiary, Falcon Oil & Gas Australia Ltd. The Farminees will carry the Group in a nine well exploration and appraisal programme from 2015 to 2018.

• Farminees will pay for the full cost of completing the first five wells estimated at A$64 million, and will fund any cost overruns, with work expected to be completed between 2015 and 2016.
• Farminees to pay the full cost of the following two horizontally fracture stimulated wells, 90 day production tests and micro seismic data collection with a capped expenditure of A$53 million, any cost overrun funded by each party in proportion to their working interest. This work programme is expected to be undertaken in 2017.
• Farminees to pay the full cost of the final two horizontally fracture stimulated wells and 90 day production tests capped at A$48 million, any cost overrun funded by each party in proportion to their working interest. This work programme is expected to be undertaken in 2018.
• Farminees may reduce or surrender their interests back to Falcon Australia only after:
  • The drilling of the first five wells or
  • The drilling and testing of the next two horizontally fracture stimulated wells.

This announcement has been reviewed by Dr. Gábor Bada, Falcon Oil & Gas Ltd's Head of Technical Operations. Dr. Bada obtained his geology degree at the Eötvös L. University in Budapest, Hungary and his PhD at the Vrije Aniversiteit Amsterdam, the Netherlands. He is a member of AAPG and EAGE.