Top 10 Company 2024 - Total Market Solutions :-28 Dec 2023 08:05
Beacon Energy
Beacon Energy (AIM:BCE) has intrigued the market this year with the prospect of strong flow rates from a newly purchased set of assets onshore Germany.
BCE acquired Rhein Petroleum last year, raising £6m to launch a summer work programme focused on the SCHB-2(2.) development well on the Erfelden field. By September the company was able to publish a highly positive update reporting that drilling had encountered an ‘excellent’ 34-metre gross interval containing 28 metres of oil-bearing net reservoirs in the Pechelbronner-Schichten (PBS) sandstones within the Stockstadt Mitte segment of the Erfelden field. These oil-bearing reservoirs were encountered approximately 25 metres higher and 10 metres thicker than prognosis, with porosities averaging 18pc in the Lower PBS and 21pc in the Upper PBS, with no water-bearing sands.
With the metrics ‘above or at the top of the range of pre-drill expectations’ BCE was able to predict ‘a material upgrade to recoverable reserves in Stockstadt Mitte and a de-risking of 2.4 million barrels of Contingent Resources already ascribed to Schwarzbach South’, and the possibility of ‘an initial production rate in excess of 900 barrels of oil per day’, in line with rates of production achieved on historic wells in the area. At those flow rates the company ‘would expect to deliver operating cash flows in excess of $1.5m per month (assuming $80/bbl Brent)’.
BCE went on to raise £4.3m on the back of the results, allowing it to establish flow rates through a clean-up of the wellbore in preparation for the installation of an Electrical Submersible Pump. And a November update upgraded the Erfelden field’s reserves, from a pre-drill Best Estimate of 3.8 MMbbls to 7.2 MMbbls (with a Low Case of 4.72 MMbbls and High Case of 10.20 MMbbls.
BCE’s value rose sharply through the autumn, but the market’s optimism was punctured earlier this month when an operations update reported that production had stabilised as a rate of approximately 40 bopd. The company said the ‘low production rate indicates that the reservoir near the wellbore has been invaded with drilling fluids which are restricting flow rates’ and that this ‘is not uncommon in situations where hole stability issues have occurred during drilling due to the use of high-density drilling fluids to stabilise the hole.’ BCE will ‘undertake industry-standard well stimulation in the fourth week of January 2024, which is expected to improve production.’ Some 1,600 barrels of oil have so far been produced, and the company ‘continues to estimate that given the excellent reservoir properties and the light oil recovered, and in the absence of an invasion zone which restricts flowrate, the SCHB 2(2.) well could achieve production in the region of 900 bopd.’
Time will tell. After spiking at 0.27p in September BCE’s shares have fallen back to 0.09p at the time of writing, taking the company’s market cap to £11.7m
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