Member Info for WetWater

Longknife: Falcon's undivided 30% interest still has me a bit puzzled - Origin is the logical buyer so that they can put together 100% and then sell whichever areas they wish. Falcon could conceivably sell its undivided interest in the Kyalla to a third party - that might be a bit awkward but certainly doable as long as Origin agreed. As I understand it, Falcon desire is to sell everything at one time. If the Kyalla proves successful it would likely be the target of the stage3 wells. If that is the case, Falcon would hope to get a nice sell price for the Velkerri dry gas and also the wet gas as determined by the next well - if the company does not get a fair price then I understand Falcon would consider doing another raise (or sell off a percentage of their total undivided holdings) and prove up the commerciality of the Velkerri shale. This situation could carry us into another year of appraisal drilling (stage4) - Falcon DOES NOT want to leave money on the table. The future is very unclear at this point and much of this is just guessing. As we complete the Kyalla the picture should start to clear up. Maybe by the end of this year we will have a better idea of where Falcon is headed.

I had thought that if the Kyalla was really successful the rig would remain in place and the stage 3 wells would be immediately drilled - saving money and time. Then OrsonM pointed out that Origin/Falcon are running up against a deadline to drill the EP76 Velkerri wet gas well. I know initially Origin was very high on this play and wanted to see it explored so they will make sure it is timely drilled. It is all merky for us trying to predict from the outside looking in - we will just have to continue to show more patience.

For now I have my fingers crossed for a nice Kyalla discovery - after that I will move on to worrying about what comes up next!

BO: June/Kyalla could be very encouraging but don't forget the Amungee's Velkerri dry gas prospect that is already considered a contingent resource. The Middle Velkerri , with its two zones, could be proven as a commercial prospect in and of itself. Santos's wells are considerably deeper, thus more expensive, yet they seem pretty excited about their prospect. Also Origin was very pleased with the Amungee well as it exceeded their expectations - that tells me it holds promise. If the Kyalla proves itself then we could have stacked plays - Velkerri B and C along with the Kyalla on about 20% of the Beetaloo and the two Velkerri's on the balance of the concession. The yet to be drilled Velkerri Wet could offer even additional asset value. From what Gabor said at an AGM, the two Velkerri dry shales are pretty much the same rock though the C does have a bit more challenges - at one time it was mentioned that the two Velkerri zones were just a flip of the coin as which to frack in the Amungee well. Great promises at this early stage. GLA

Northern: Falcon would likely follow the same business model farming out to an E&P company. At one time Chevron was Falcon's technology partner in the Karoo. Chevron ended that relationship when SA went from bad to worse in the last election. There is going to have to be some major changes in the SA government before Falcon could ever begin to develop the Karoo - even if they are awarded a permit. Some may not know but POQ was the committee chair of team that was trying to negotiate the SA's excessive demands on ORI. The SA wouldn't budge and now with the current non-functional government's radical demands on racial regulations I have lost all hope in the SA dream.

Nerves: Thanks - didn’t realize the 4 sentences Shalamar9 posted was the total “article”. Thought I might gain some insight as to where that 25Tcf gas we are chasing derived from. If that refers to the total recoverable gas on the Beetaloo then that is much less than the 85 Tcf previously assigned - if the 25 Tcf refers to the Kyalla formation then that would be a really big deal!

Shalamar9: Did the 25Tcf figure come from The Times Ireland article? I am wondering if that is potential recoverable gas that someone has assigned the Kyalla formation? Sounds awfully high at this point. Thanks

Schlemiel: A lot said in Calabria's statement - ''In relation to Beetaloo, obviously, a key growth prospect for us in Origin, and in particular, in the Integrated Gas business, the Kyalla shale liquids-rich gas play".

This may be what is happening to POQ's promise of all the independent news releases. Falcon was initially free to release news due to the fact that Origin did not consider the Beetaloo Kyalla well to be a material event. Origin may have reconsidered the "material aspect" of the Beetaloo - this one Kyalla well, straight up, is not material to Origin but now it seems, based on Calabria's statement, is an initial indicator well of a key growth prospect of the Beetaloo - a major potential asset of Origin Energy.
Thus we are back to following Origin's lead on news releases on these Beetaloo wells IMO. I am fairly sure the Kyalla's 24 hour initial flow test result will be considered a material event for Origin.

Dprussky: Not really much for the market to get all excited about. All that happened was the lateral was completed, cased and cemented. I'm glad they got the lateral completed without any further problems but that does not make a well - just another stage of the process. If the initial 24 hour flow test looks positive then we will see an uptick in the stock price. GLA

Newtofo: IMO the water well bores would be drilled by much smaller portable units. It wouldn't be very practical to more that big rig/equipment around just to drill small bore holes (4?). As you know, these wells just go down into the aquifers - don't know what that depth is in this area but I would think several hundred feet. These are the same wells as the ranchers use for water. My takeaway from the news release is that they should be fracking within about a month. I also have the impression that there is a lag between completions points and the actual release of news - it wouldn't surprise me if Origin might already be drilling these monitoring bores - just a guess on my part. Either way is good news and things seem to be moving forward - though slower than we would like :^(

Early fracking tests in Beetaloo 'exceed initial expectations' with more drilling to come
Chris McLennanChris McLennan.
Energy explorers have been encouraged by the early drill results in the Beetaloo.

Santos has talked up the early results from fracking in the Beetaloo with the release of its annual report today.

The energy company told investors the "successful stimulation of the Tanumbrini-1 well" east of Daly Waters had encouraged the company to continue with the drilling of two more wells after this wet season.

The success with a four-stage stimulation (fracking) program in the Middle Velkerri shales produced gas flow rates of 1.2 million cubic feet per day had "exceeded initial expectations".

The Tanumbrini-1 well had been previously drilled vertically almost four kilometres deep.

" ...with the approval of environmental plans by the Northern Territory government, we now expect to drill two appraisal wells in 2020 following the wet season," the company said today.

"The McArthur Basin has significant gas resources and has the potential to provide feed gas to support future backfill and/or expansion opportunities through Darwin LNG."

Preliminary gas composition analysis from that first fracking test indicated 91% methane, less than 5% total inert content and 3% ethane.

Santos expects to commence drilling in the first half of 2020 followed by multistage stimulation of two horizontal wells: Tanumbirini-2H and Inacumba-1H.

The company said natural gas has a key role to play in a lower carbon future as it produces 50% less greenhouse gas emissions than coal when used to generate electricity, can significantly improve air quality and is the perfect partner for renewable energy sources.

Prime Minister Scott Morrison has also pointed to the use of gas as a "transition fuel" between coal and renewables as a key to the future energy needs of Australia.

Origin Energy and Falcon Oil and Gas are also drilling in the NT to test claims of a giant gas reservoir in Beetaloo, south-east of Katherine.

A moratorium on gas exploration was controversially lifted by the NT Government in 2018.

Newtofo: My bet is Falcon issues its own release today/tonight. POQ indicted Falcon was free to issue its own news releases at its discretion but it appears Origin is still in control these updates. Maybe Origin is now thinking the Beetaloo concession is considered to be a material event for their stockholders -therefore they want first right to release this news. Anyway this is great news and now on to fracking.

Newtofo: My bet is Falcon issues its own release today/tonight. POQ indicted Falcon was free to issue its own news releases at its discretion but it appears Origin is still in control these updates. Maybe Origin is now thinking the Beetaloo concession is considered to be a material event for their stockholders -therefore they want first right to release this news. Anyway this is great news and now on to fracking.

Darnit: I have to chuckle when I see posters on this board touting they know more than the experts in the industry - seems that is always a stock board thing. As POQ told me one time when I was complaining about the length of time to drill a well - Origin is not punching development wells in the middle of the Permian Basin in West Texas. The remote location of the Beetaloo creates its own set of problems. Being only the second horizontal fracked well in OZ carries its caution. Being the first ever horizontal fracked well in the unknown Kyalla formation carries the need to move slowly and cautiously - we just witnessed the Kyalla hole problem - that was an unknown issue/concern up until it popped up.

Six months does seem a little long but for you to say these wells are 3 week jobs shows your lack of understanding in what Origin is dealing with. In time if the Beetaloo is declared commercial and Origin is drilling 16 wells per pad then yes, you can expect wells to be drilled much more quickly and economically.

In the meantime you could help us out by calling up Origin and telling them how it should be done LOL!

BO: Here is today's article in the Katherine Times regarding the wet season:

Nice Downpour for Katherine and a Cyclone might come calling
Chris McLennanChris McLennan

Finally a nice drop of rain for Katherine and look out - a tropical cyclone may be heading our way too.
Katherine has recorded more than 10mm from a downpour of rain this morning although it is still early to calculate the total falls from the storm.
Many gutters and drains overflowed as the town suffers one of its wet seasons on record.
But some weather experts are saying a tropical cyclone could develop over the Gulf of Carpentaria this weekend and may track across the Top End, then as a tropical low, just south of Katherine.
Most weather websites predict the path of the low is heading Katherine's way early next week but it is a logn way out and there are no warnings yet from the Bureau of Meteorology.
The bureau says a monsoon trough is developing over the Territory's Top End and northern Queensland during the second half of this week.
"As this monsoon trough deepens towards the end of the week, a number of forecast models suggest that a low pressure system will develop over the Gulf of Carpentaria. Conditions over the Gulf will become favourable for this low pressure system to deepen into a tropical cyclone on the weekend," the bureau says.
A further update will be issued this afternoon.
If It will only be the fourth cyclone of the season and is set to be called Esther.

Newtofo: Agree - this 2 well a year drilling program is painfully slow. Origin needs to step up their game to even come close the timeline of the original farmout agreement - even allowing for the moratorium. I suspect when push comes to shove Falcon will work with Origin as long as best attempts are being made to meet the performance clause - not much else they can do at this point - IMO that is somehow allowed in the original farmout agreement.

OrsonModesto mentioned that Origin has work program commitments for EP117 - Should that be for EP76 ?- now that the Kyalla 117 well is being drilled I would assume that takes care of any commitments for that permitted area? If Falcon/Origin could potentially be forced to forfeit rights to EP76 one would think that the second stage 2 well would certainly be drilled this year but hat's above my paygrade.

If forfeiture is a possibility then I don't see how Origin goes directly to the commercial offsets of the Kyalla as some say was mentioned at the AGM. At one time Origin was pretty high on the Velkerri wet test - would they chance giving it up - if the Kyalla came in really strong - that would be a tough call.

In the meantime I look forward to the current Kyalla well - that could certainly lift some spirits around here!

BO: Have you looked at the historical rain data? From initial reports the rainy season got off to an unusually late start with lighter rainfall than the norm. I have not researched this but the “rain gods” may be looking kindly upon us this year which would be very positive for this drilling season.

SandyD: Someone at the AGM mentioned that if the Kyalla flow rates look really promising then Falcon/Origin would possible forgo the Velkerri wet well. If that is the case then there should be sufficient funds for the final two full blown horizontal wells without any further dilution. Also with the wet conditions the Ensign rig will remain on the Kyalla location and the final two wells would begin in short order. Lots of ifs, ands, and buts - in the next couple of months we should have an answer to how this will play out.

VillaMaria: You might want to go back and read that post. I plainly said it was unverifiable so take it with a grain of salt. While you are at it you might go back and read the Nano post where you said I ran Nano off - I simply told him that if he knew who I was quoting and who he was calling an idiot and stupid he may want to reconsider his comments - I stand by that 90% success quote for the Kyalla well. Thats certainly not 100% but it gives me hope.
I don't know who you are but why not try to contribute something to the board other than simply throw out criticism that adds no value. You and others of your sort would not hurt my feelings if you simply put me on ignore - I have come to appreciate the ignore feature - in fact you will be awarded the honor of being my second filter on this board - I have a feeling I won't miss out on anything. Bye!!

OrsonModesto: I will relay what I have been told - Please take this with a grain of salt as I can't verify. I was told about 1 1/2 to 2 months ago that the Sweetpea shares had been reduced to about 10 million shares. I assume that would be even lower at this date. It was also relayed to me that these shares were being sold in an orderly fashion into the market so as not to drive the price down - This is somewhat verified by the order you posted not to discount the price greater than 10% without court approval. The buyer of Sweetpea was not interested in Falcon Stock - only in the acreage position held by Sweetpea.

If all of the above is correct, IMO the shares of Sweetpea should soon, if not already, be liquidated and we should see the share price begin to show more strength.

Also thanks to BuckeyeBuff for sharing his correspondence with the board. Question: If a large shareholder sells its position shouldn't that somehow be reported to Falcon? To not report would mean Sweetpea could be shown as a large shareholder for years and not hold any stock - I would think a large shareholder would be required to report the liquidation of a large percentage of its holdings.

Newtofo/ITGuy I am looking for the horizontal to be completed about the end of February. POQ gave us a guideline of 30 - 45 days for the frack job. Then the well need to unload the frack fluid prior to any preliminary 24 hour flow test (ten days or so??). Add that all up and I am thinking mid-April at the earliest - about 2 weeks longer than your scenario. We are all just guessing at this point but I would caution anyone from expecting any news prior to the first week in April to the end of April - Seems things tend to move slowly deep in the outback. I don't know what the weather will do to Origin and moving frack equipment - may just be more of a hassle than a delay.

Hi Rich. Good article on gas prices. The key IMO is: "While this capital flight will exert significant pressure on the over-leveraged players in the space, it ultimately sets the stage for financial discipline, higher prices, and positive returns on invested capital in the shale industry." The economics of the oil/gas industry has historically had an ebb and flow to it. When prices drop and drilling slows the price/drilling soon begin a return and always overshoot the demand - I have grown up in an oil economy - its always been this way and IMO it will always have its peaks and valleys.

I agree with tnbird that the natural gas market in Australia is quite different from that of the US. While the U.S. has a huge surplus of gas, Sidney and the East Coast of Australia are still experiencing a domestic gas shortage.

With all the shale drilling in the US, it doesn't take long for a slow down in drilling to begin translating into higher prices. In oil the decline curve of a shale well is very steep so within a year a surplus can be worked off - I'm not that familiar with gas shale well declines.