Email reply1 Mar 2024 15:04
Thank you for your email, which we are responding to in our capacity as IR/PR for Beacon Energy.
The Company has been clear through RNS updates that the SCHB 2(2.) well drilled last year encountered significant operational challenges during drilling which created material delays and cost overruns. The Company has also updated that in the event the well did not clean-up during the later months of 2023, then additional funding would be required.
I have tried to layout some more information below which I hope provides additional context:
The sand jetting operation with coil tubing was undertaken because: it was relatively low cost, it could be funded, the equipment and services were available, and it had the potential to materially increase production. A side track was always an option but due to rig availability could not have been secured until April and required a fund raise. The invaded zone could be c.2m, there is no way to directly measure the penetration of the sand jetting. The fact that is it was unable to reach beyond this zone is evident from the encountered flow rates which suggest that the reservoir near the wellbore remains invaded with drilling fluids, which is continuing to restrict oil flow.
While the root cause of all those operational challenges is due to wellbore stability issues following a fishing operation of the drilling assembly, and the necessity to set casing early and sidetrack the well back in July/August, that situation generated a number of knock-on consequential issues that then needed to be overcome. The main one being the higher mud weights that were required to maintain hole stability, but that meant the excellent reservoir zone was invaded around the wellbore with drilling fluid.
Based on the excellent reservoir properties and light oil recovered by the Schwarzbach-2(2.) well, and the higher rates of production achieved on historic wells in the area, management maintains belief that the well can produce at materially higher levels.
As updated the Company has taken the decision to undertake a side-track operation of approximately 100-meter length in order to by-pass the damaged reservoir by between 2 and 10 meters and has raised the funds to do so. The operation of course carries operational risk, but the Company judge the sidetrack is the correct next step to achieve the materially higher production rates that are possible. That risk is being managed through lessons-learned from the original drilling in terms of ensuring drilling mud parameters, primarily the mud weight are controlled within set tolerances to manage invasion into the formation. Given the side-track’s shorter hole length (100m vs 2200m) it should be possible to control these mud parameters with much greater certainty.
Best regards,
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