Falcon Oil completes production testing at Kyalla 117

2021-10-07 06:32 ET - News Release

Mr. Philip O'Quigley reports

FALCON OIL & GAS LTD. - KYALLA 117 N2-1H ST2 UPDATE

Falcon Oil & Gas Ltd.'s production testing has been completed and the well shut in at Kyalla 117 N2-1H ST2 in the Beetaloo subbasin, Northern Territory, Australia, with the company's joint venture partner, Origin Energy B2 Pty. Ltd., a wholly owned subsidiary of Origin Energy Ltd.

As noted in the company's press release on July 20, 2021, while Kyalla 117 flowed liquids-rich gas without assistance for intermittent periods, production was not sustained and there were indications of a potential downhole flow restriction.

On Sept. 14, coil tubing operations recommenced at Kyalla 117. No apparent restriction or blockage was identified in the production casing. Following a nitrogen lift, the well was able to flow unassisted at rates between zero (that is, rates too small to measure) and 1.5 million standard cubic feet per day for five days before loading up with water. Gas composition data are not yet available but gas-specific gravity data are similar to that measured during the previous phase of testing. Trace condensate was also observed.

Further analysis will be undertaken, including additional core analysis and well design considerations, to enable a conclusion to be reached on the results from operations at Kyalla 117, which will inform the future approach to further drilling and testing of the Kyalla play in the Beetaloo subbasin.

The purpose of the current exploration campaign was to collect data across the three primary plays within the permits: Velkerri dry gas, Velkerri liquids rich and Kyalla liquids rich. Despite the challenges, the Kyalla remains a viable target within the Beetaloo. Kyalla 117 was the first horizontal well targeting the Kyalla and achieved its primary technical objective of demonstrating liquids-rich gas flow potential of the Kyalla.

Recap on the gas composition

The initial analysis of natural gas by gas chromatography confirmed a liquids-rich gas stream low in carbon dioxide as follows:

• C1 (methane) equals 65.03 mole per cent.
• C2 (ethane) equals 18.72 mole per cent.
• C3 (propane) equals 8.37 mole per cent.
• iC4 (isobutane) equals 1.29 mole per cent.
• nC4 (normal butane) equals 2.03 mole per cent.
• C5+ (pentane plus) equals 2.73 mole per cent.
• CO2 (carbon dioxide) equals 0.91 mole per cent.
• N2 (nitrogen) equals 0.92 mole per cent.

The elevated C3+ gas component of 14.42 mole per cent confirmed the Lower Kyalla shale as a liquids-rich gas play. Gas composition data also support the view that the Kyalla gas stream will have elevated LPG (liquefied petroleum gas) and condensate yields.

Philip O'Quigley, chief executive officer of Falcon, commented: "The information collected from this first horizontal well drilled in the Kyalla liquids-rich play, including the elevated liquids component, confirmed that the Kyalla remains an attractive target for further appraisal. Our immediate focus will now turn to the Velkerri play area where we are currently drilling a new exploration well in the potentially liquids-rich flank of the basin, an area of key interest for the Beetaloo subbasin. We look forward to updating the market as soon as the results from this well are available."

This announcement has been reviewed by Dr. Gabor Bada, Falcon Oil & Gas's head of technical operations. Dr. Bada obtained his geology degree at the Eotvos L. University in Budapest, Hungary, and his PhD at the Vrije Universiteit Amsterdam, the Netherlands. He is a member of the American Association of Petroleum Geologists.

About Falcon Oil & Gas Ltd.

Falcon Oil is an international oil and gas company engaged in the exploration and development of unconventional oil and gas assets, with the current portfolio focused in Australia, South Africa and Hungary.