Absolutely Sneaky --- as there was a report from Santos" analyst Ben Wilson that was very positive for commercial prospects for all of the Beetaloo -- with a clip of those comments below. I didn't mention Santo's drilling program next door ( which I should have) as I was focused on what Origin's three separate projects could potentially do for Falcon's share price, but success by Santos could be a major upswing for Falcon shares for sure.
FROM BEN WILSON:
" Testing after a fracking program at the Tanumbirini vertical well yielded gas flow rates of more than 1.2 million cubic feet a day, beating expectations".
"While the horizontal wells needed to prove up the play will only be drilled later this year, sources pointed to a rough rule of thumb that flow rates achievable from a horizontal well can be about 10 times higher than for a vertical one. Such a result of about 12 million cubic feet a day, if sustained, would confirm the Beetaloo Basin as a likely major producing region".
The most interesting and potentially game changing project for this year's work program -- is the fairly straight forward re-test on the actual flow rates that each of the 11 zones that were contributing to the total 1.1 mm cu ft/d that was recorded for the full 60 day successful flow test at the Amungee H1 well way back in 2017. If you take a quick look at the fifth diagram/drawing on the link below -- you will see a casing deformation is clearly marked between frack #6 and frack #8. This casing deformation took place just after the geologic fault in the non-fracked zone #7 -- which forced the drilling crew to realign the horizontal drill pipe upwards to get back into the center of the B shale. If this casing deformation eliminated "all or most" of the dry gas from fracks #1 through to frack #6 from reaching the surface -- then the 1.1 mm cu. ft. per day that flowed during the 60 day flow test was almost entirely from fracks #8 through to #12. If the re-tests on each and every frack zone on the Amungee shows this to be correct -- then the relatively short one km horizontal into the B shale could have produced in excess of 2 mm cu. ft. per day without the casing deformation. This can be extrapolated to clearly show that a game changing standard 3 km horizontal production well in the B shale would flow at 6 mm cu. ft. per day, and our share price should start to reflect real commerciality -- due to Origin's estimated recovery potential of 85 TCF from the mid-Velkerri across all three Falcon permits.
While it would be appreciated if there is an upcoming formal press release from Origin letting us know the specifics on what will actually take place at each of the three site over the next six months -- there is still lots of time for Origin to complete all three proposed projects this year. None of the three proposed projects will require a great deal of time with the 90 day flow testing of the Kyalla 117 probably taking the longest -- if Origin can solve the salinity and flow back issues.
Just for a bit of fun reading over the weekend -- here is an "optimistic" forecast on where I think we could see some relatively positive news flow coming our way before we get to the end of December, and a possible move up in our dismal share price for each of the three.
Of the three proposed projects this year -- the vertical well drilled into the Velkerri flank at EP76 on the eastern edges of the Falcon permits -- may have the least overall impact on lifting our share price. This will be a vertical only well with some DFIT fracks to see if there are clear indications that the EP76 Velkerri zone has good quantities of both wet and dry gas -- similar to what Empire is indicating further to the East. We already know, from what Empire has done very quickly this year, -- that drilling a vertical and using Schlumberger to do the vertical DFIT fracks does not take more than 60 days to complete. There will be some added time required to complete the set-up on the pre-prepared well pad for this EP76 vertical -- once a drilling rig has been secured. If there are clear indications that there is both wet and dry gas, (in hopefully what appears to be decent quantities from the DFIT tests), -- this will be positive for Falcon's share price, but without a horizontal in the works until next year at the earliest -- good news from the Velkerri flank well probably won't drive our share price up for very long.
The second project, being the proposed re-testing of the Kyally 117, certainly has the potential to move Falcon's share price back up from the recent lows. If the salinity problems and limited gas flows can be resolved -- which is still a very big question mark -- then the Lower Kyalla has the potential to be our fastest way to commercial production due to the very encouraging levels of wet gas shown from the 17 hour flow test back in January. I believe we will need to see that well completely cleared and flowing at something close to 1,000,000 cu ft per day with approximately 30% of that gas being wet gas before we see any real surge in Falcon's share price from that well. The difficulty is that the January 17 hour flow test was only indicating 500 to 600 thousand cu. ft. per day of dry and wet gas, but if the data is correct and the flow testing moves the total gas flows considerably higher from the January numbers -- then this could move the needle significantly.
Thanks dprussky -- as it was definitely a members or paid guests presentation yesterday by Alex Cote, and there should have been some fairly good ideas presented on what Origin's plans are for this year and when -- as the tickets were sold for the event on just that basis as per the description sent out in advance below.
"Alexander will provide an update on Origin’s 2021 Beetaloo program and share some examples of how its maximizing opportunities for Territorian's.
Alexander will also provide insights into some of the major Beetaloo themes that are likely to unfold over the coming year as industry continues to move the broader Beetaloo project towards development".
The question now is whether Falcon shareholders will finally get an update or whether we will have to continue to guess for all of this year on what Origin is or isn't doing??? Thankfully -- we have dprussky using his spy satellite for sneak peaks through the clouds into the Beetaloo -- as that might be the only glimpse we have on what Origin is hiding -- LOL.
Thanks Darnit -- as this is best description yet for using a slickline jet pump. Since Origin was only able to get a short 17 hour flow rate in January using nitrogen lift -- I am hoping they are looking more at what you have posted today with the Jet Pump program.
Any chance that you can pop down to Daly Waters and give them a hand -- LOL..................
Thanks dprussky, not sure what the water would be for unless Origin has actually opened the 117 well up again and is getting some of the saline water flow back?? It won't be for fracking as that has been completed -- so maybe with today's Beetaloo Exploration Project UPDATE by Alex Cote to the Energy Club -- we will finally get some sort of update for the shareholders that actually own the companies???
Thanks dprussky -- It doesn't look very promising from half way thru to the end. It sort of looked like some equipment might have been brought in for a day or three, but then removed again along with another trailer being removed as well. Does not look like anything of significance going forward anywhere that Origin has stated for this year. Maybe we will get something positive after Alex Cote's update to everyone else but shareholders on June 8th, but somehow doubt we will get anything from Origin or Falcon.
dprussky, are you asking about the vertical DFIT frack that Empire is going to do on their well or are you talking about the Velkerri flank well. I am assuming it is the Empire well as the Velkerri flank well is a long way off for a vertical DFIT frack, as is the Santos horizontal fracking.
If it is Empire's vertical frack -- to see where the best zone is for drilling the horizontal they want to drill later this year -- your timing is fairly accurate for a vertical DFIT frack, provided that all of the pumping trucks (only a couple needed for a DFIT) and the rest of equipment is set up and ready to go..
Otd2000 --- If not before -- we should be getting something from Origin shortly after Alexander Cote informs everyone in Darwin (who aren't necessarily shareholders in the Beetaloo - like we are) exactly what this years exploration program will be. Maybe Origin and Falcon are not updating shareholders -- just to keep the suspense alive for Alex's presentation -- LOL.
Origin Energy - Beetaloo Exploration Project Update
08 Jun 2021
Alexander will provide an update on Origin’s 2021 Beetaloo programme and share some examples of how its maximising opportunities for Territorian's.
Alexander will also provide insights into some of the major Beetaloo themes that are likely to unfold over the coming year as industry continues to move the broader Beetaloo project towards development.
scinceday1 -- This is just my own speculation and probably one of the lower estimates on the Falcon Board here, but my most optimistic price point for a final sale of Falcon's 22% interest in the Beetaloo is $1 in US equivalent funds or $1.50 in Aussie dollars.
If commerciality is proven -- especially "if" it is with a combination of both dry gas across the Velkerri and wet gas in the lower Kyalla -- then the future value of Falcon's 22% share of that gas will be in the multiples of $billions. However, that future value has to be extremely discounted down to approximately one billion US due to the very long 20 year time line, and the very high funding commitments that any buyer of Falcon's 22% interest will have to make for drilling 1000's of shale wells. Any buyer will also have to contribute 22% of the cost for all the gathering lines and pumping stations that will be required -- as it will take many years and a great deal of infrastructure to drain the shale gas from the 100 plus square miles of Beetaloo in the Falcon permits.
tnbird and OilCountry,
Origin's original plans for this year were two full length 3km horizontals into the Lower Kyalla -- as all the data still shows the fastest way to the best of commercial indications was drilling and testing those two full length Kyalla horizontals. The failure to get past this darn salinity problem has thrown a huge monkey wrench into the 2021 E&P program and is the only reason that Origin released the Ensign 963 drilling rig over to Badu Energy. Origin has been paying huge monthly fees to Ensign to keep the rig on site at 117 -- as their plans were for two horizontals right there if the 117 flow rates were as expected.
The main reason for the go slow program for this year, is all to do with the failures at the 117 well to get through the 60 day flow test. There was even talk back in December about doing "no added testing" at the 117 well until the rainy season was over, but thankfully POQ was able to persuade Origin that spending the money to get the limited flow test in January was too important to wait until now.
The program for 2021 is indeed a limited one, but that is all due to the uncertainty of the Kyalla 117 and the flow testing yet to be done. Thankfully, Origin is going to do a vertical on the Velkerri Flank and the re-test at the Amungee site, as well as try for the 60 to 90 day flow test on the Kyalla 117. If the 117 flows as hoped -- then early next year there should be at least one 3km horizontal into the lower Kyalla and we won't know more about the second 3km horizontal until we know more about the Velkerri flank wet indications from the DFIT testing at that location later this year. The changes to the JV in April of last year gave Origin the formal ability to go out and do Farm-in deals if they wanted -- which would be very much in Falcon's best interest -- as any Farm-in would increase Falcon's value going forward. This minor change was not in the written press release, and wasn't really required to be noted -- as Falcon would never have refused a Farm-in by Origin prior to the renegotiated JV in April of 2020 anyway.
The only good news about this year's very limited E&P program is there is lots of time left this year to complete all three projects -- as none of them are very onerous on length of time required. Even though it would be great to finally hear when Origin is going to get started, the drilling of the Velkerri flank along with the DFIT tests will only take a couple of months, and the Amungee re-test will only take a couple of weeks. Therefore, it is the clearing of the Kyalla 117 well and getting the 60 to 90 day flow test finally underway that needs to get started soon.
Me Too Beetaloo, and that is why we need to see clear signs of commerciality to get Falcon's 22% interest up to that billion dollar range. That higher price point won't be achievable until we see 3km full length producing horizontals drilled by Origin into -- ideally the lower Kyalla or back into the Velkerri B shale. With no horizontals planned for this year -- then any clear signs of commerciality won't come until the late fall of next year at the earliest. This brings us back to my decade old adage -- that you can always always buy Falcon cheaper -- which is exactly what is happening AGAIN on the TSX -- darnit.
Oilcountry99. I am hoping that your "Contrarian View" is accurate -- even though it might indicate a much lower selling price for Falcon -- as any bump above 50 cents would see most of my shares gone before it is too late to enjoy a bit more golf -- LOL.
There are a couple of key reasons why I don't believe there is any deal in works just yet with Origin, or anyone else for that matter. Origin was given the full right to go ahead and do any Farm-In deals they wanted a year ago when they increased the spending cap and both reduced Falcon's ownership position and gained full control over the E&P timeline. Origin's newly acquired control let's them do Farm-Ins without Falcon's approval whenever they want to do so -- which is not a bad thing as any Farm-In would just increase the value of Falcon's share of the Beetakloo. By the very nature of gaining the full right to do Farm-In's -- Origin will be looking to "reduce it's spending cap" for the Beetaloo and not increasing that spending cap by purchasing Falcon's interest at whatever cash and stock deal they might have enter into.
The strongest reason for no deal in the works just yet -- is the lack of clarity on the commercialization of the Falcon permits. POQ has stated, in past presentations, that the best selling price for Falcon will come with the success of one or ideally two full length horizontals producing commercial quantities of gas -- which is now at least one year and most likely two years away. The best chances for commercial indications would come from success of full length horizontals into the Lower Kyalla with it's 30 to 35% levels of wet gas. With all the data to date and the limited success from the 17 hour flow test in January -- that is exactly where Origin would like to drill at least one horizontal if that very valuable formation can be forced into giving up it's riches. If the Lower Kyalla can't be cleared -- then we ideally need to see some success on wet gas at the Velkerri flank well in permit 76, or alternatively two full length horizontals back into the Verkerri B shale -- most likely to the south of the W1 well site. Any switch to full length horizontals to prove up more Velkerri dry gas would be well away from the Amungee zone -- just so Origin can prove the Velkerri B shale zone exists across all Falcon permits -- which would increase their farm-in options as well as helping to prove up the 85 TCF of recoverable gas in the Velkerri.
Sneaky, the Kyalla 117 well was temporarily shut down after the small January flow testing was done. There would have been a couple of staff only left on site for safety and security reasons, but no continuing flow since January. Hopefully, now that we are moving into June with "only a six months" left before Origin calls another halt to all work due to the rainy season -- we are going to be blessed with some sort of update from them???
If anyone has bothered reading through the Interim Financial statements for Falcon today -- let us know if there are any surprises? I am so fed up with this stupid stock -- (after waiting eight long weeks of perfect weather in the Beetaloo for even a minor update on this year's exploration plans) -- that I deleted the Interim Statements without even looking -- LOL.
I believe that currently there are three risks with Falcon ever seeing a reasonable payout in the next couple of years.
The first risk is the most obvious one -- with the Beetaloo shale gas being too expensive to extract and thus never becoming a commercial gas field. I think this is the lowest of "our" three risks -- even if the wet gas in the Kyalla or Velkerri flank doesn't work out in our favor. We already know that the Velkerri B "Dry" shale gas is a massive discovery with upwards of 496 TCF of dry gas estimated to be in place and an estimated 85 TCF of dry gas recoverable. There is just too much long term value and Aussie gas security in just the B shale zone alone for Santos, Origin, Tamboran, and Empire to ever walk away without making every effort to get long term drilling costs down to an economical level of $5 or $6 million per 3km long horizontal well. This could take longer than two years to prove up, but I have very little doubt that the Beetaloo will become a producing shale gas field in time.
My second area of risk for Falcon shareholders is the three major shareholders and the possibility of Viktor, Blair or Mathys getting fed up with the many many years of delay and start selling massive amounts of Falcon stock into the open market. We have already seen for two years now what the continuous selling by the lawyers of the Petrohunter/Sweetpea shares can do to the share price, so any attempt by any of the three major shareholders to sell out would crush Falcon's share price to the very bottom.
The third and now probably the highest risk -- is Origin using it's new complete control status (that was agreed to last spring when POQ gave up any control over E&P timing decisions in return for Origin's committing to a much higher spending cap) to do exactly what they are doing now -- which is delay, delay, delay. Origin is now completely in the driver's seat on when they will go about doing any E&P work on the Falcon permits -- so they are in a very strong position to delay forward progress to the point the Falcon is forced into reducing it's dismal 22.5% ownership position even further. Any further reduction in Falcon's ownership below 22% (of the best three permits in the Beetaloo basin) would for all practical purposes eliminate most other prospective purchasers (like Inpex or Santos) and make any ridiculous lowball offer by Origin the only option we have left.
If we don't see any serious progress made by Origin in the next few months -- then the third risk will be looking more and more like Origin's game plan for Falcon going forward.
Guernica, while the frustration with no news is certainly understandable and warranted -- there isn't a chance in helo that Falcon or Origin are planning on leaving the Beetaloo at this stage of game.
Origin is already hiring long term employees for the Beetaloo -- which is a fairly clear indication that Origin will be moving to stage 3 of their JV with Falcon and spending another Aussie $200 million on the Falcon permits. There are already multiple drilling programs underway across the Beetaloo with many more to come. We won't know categorically whether the Beetaloo is a bust for another year at the earliest, but with Origin, Santos, Empire, Tamboran, and now the Federal gov't risking huge sums and reputations on getting the Beetaloo to flow commercial -- it is way to early to call it a bust.
As for the Karoo -- none of that talk is coming from POQ -- as he won't waste anymore time traveling to and from that country until the new legislation is passed and political idiots have given a firm go ahead for E&P to start. The current talk about the Karoo is just on-going political ineptness in South Africa and painfully won't amount to any drilling in the Karoo by Falcon or Shell for a few years at the earliest.
Daly Waters makes the news headlines in the N.T. for the first time this year, but not for fracking or drilling -- darnit.
The 2016 census shows a population of 9 for Daly Waters, but this story says there were 200 in the pub at the time of this incident. I should have invested in a pub 12 years ago instead of Falcon -- LOL.
This is starting to get way beyond ridiculous -- as this will be Alexander Cote's third Beetaloo presentation and update over the past 6 weeks --- but absolutely nothing from Origin and Falcon to the people that own the darn companies -- us shareholders.
Everyone on the inside of either petrogeolst clubs or the Energy Clubs in the Northern Territory are getting updates on Origin's work plans by Alexander Cote -- so you have to wonder why in the hexx are we the last to know what the hexx is going to take place this year???
The starting point for getting the few simple Origin Beetaloo projects under way -- is not a major concern -- as nothing Origin has planned for this year will take a great deal of time. However, it would still be nice if we weren't the last people of the planet to find out when those plans are set to start and finish.
Santos has two long horizontals planned -- so they will be trying to work as hard and fast as they can -- to get flow testing under way before the next rainy season gets fully underway. Origin is only doing a simple vertical in the velkerri flank location, along with trying to get the saline water out of the Kyalla and then a very simple retest of the Amungee well.
All in all -- not a very aggressive campaign this year -- given that Origin has wasted a full year on the Kyalla already, but still it would be nice to kept somewhat apprised of when this minor work program will start since the weather has been perfect for almost two months now.