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(Sharecast News) - Falcon Oil & Gas announced significant achievements at the Shenandoah South 1H (SS-1H) well in EP117 on Monday, surpassing pre-drill expectations.
The AIM-traded firm said the SS-1H well achieved a commercial IP30 flow rate of 3.2 million cubic feet per day, normalised to 6.4 million cubic feet per day over 1,000 metres.
During the 30-day initial production (IP30) flow test, the SS-1H well showed a steady low declining curve, maintaining a rate of 2.9 million cubic feet per day over the stimulated length, with a stable reservoir back pressure of 575 psi.
The results exceeded initial projections, and were indicative of favourable geological rock properties comparable to those found in the US Marcellus shale.
Falcon said the extrapolated IP30 flow rate suggested a potential future production rate of approximately 19.5 million cubic feet per day for proposed 10,000-foot development wells, aligning with some of the highest flow rates observed in the US Marcellus shale.
That, the board said, underscored the significant gas production potential of the Beetaloo Basin.
Falcon and its partners were now poised to advance development plans for the proposed 40 million cubic feet per day Pilot Project at the Shenandoah South location.
The firm said the project aimed to start with six 10,000-foot development wells, with drilling scheduled to begin in the second quarter of 2024, targeting first gas production in the first half of 2026.
With $5m in cash as of January and further financial support from a gross AUD 16.67m (£8.61m) carry, Falcon said it was well-positioned to initiate drilling activities for the initial two wells.
The company remained open to various funding options, including equity issuance, debt financing, pre-payment for gas, and potential farm-down opportunities, to meet its capital commitments for first production.
Flow testing of the SS-1H well would continue for the next 60 days to determine average IP90 flow rates, with results expected to be announced in April.
"The IP30 flow rate announced today of 3.2 million cubic feet per day, normalised to 6.4 million cubic feet per day over 1,000 metres, are truly stellar and mark a major turning point in the Beetaloo Basin," said chief executive officer Philip O'Quigley.
"Not only did the results exceed Falcon's pre-drill commercial threshold of a normalised flow rate of three million cubic metres per day by more than 100%, but the geological properties evidenced in this part of the Basin, including reservoir pressure, effective porosity and gas-in-place all point towards the significant resource potential of the basin."
O'Quigley said the company would continue flow testing the well for the next 60 days to achieve an IP90 flow rate, which would better determine the resource potential.
"We can now look forward with confidence to commencing the proposed 40 million cubic feet per day pilot development project which will start with the drilling of the first of six 10,000 feet development wells in the second quarter of 2024, subject to stakeholder approval and funding, and look forward to updating the market as those plans begin to materialise."
At 1233 GMT, shares in Falcon Oil & Gas were up 16.99% at 13.04p.
Reporting by Josh White for Sharecast.com.
