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The Katherine Times article quoted Graham Sawyer. Basically the whole fracking process needs to be put on hold as it is just too risky - anyone surprised!

NT's first frack well has to be partially plugged.
Chris McLennanChris McLennan

Origin's Kyalla 117 is the first well to be drilled since the moratorium was lifted to explore for shale gas in the Beetaloo Base near Daly Waters.
The first new fracking well in the Northern Territory has run into trouble and had to be plugged.

Origin Energy's massive Kyalla Well looking for shale gas in the Beetaloo Basin had to be shut down after "operational challenges".

Origin joint venture business partner Falcon Oil and Gas issued a statement overnight said it had successfully drilled its exploration well vertically but had problems when it went sideways with a horizontal drill, a key part of fracking operations.

Origin wanted to drill the horizontal well between one to two kilometres in length but struck trouble after 700 metres.

"... operational challenges were experienced in maintaining adequate clean hole conditions and stability over portions of the horizontal production hole section appropriate to complete operations," Origin said.

"The initial horizontal production hole section will now be plugged in line with regulatory requirements. This will be followed by sidetracking drilling a new horizontal production line section."

Katherine Times understands the vertical well shaft is not being plugged and can still be used.

The company said the failure was "not uncommon in an exploration drilling program such as this".

But anti-fracking groups have called for the entire operation to be shut down until the failure is more fully reviewed.

Graeme Sawyer from NT Protect Country Alliance said the NT public deserved more than the scant detail and industry-speak contained within Falcon's statement.

"It could be that the driller can't keep the borehole open and that the rock is collapsing around the drill bit," he said.

The gas companies drill deep into the shale rock and sideways, or horizontally, to frack the rock for gas extraction. Graphic: Origin Energy.

"Risks will increase if Origin and Falcon push ahead to frack shale rock from a different horizontal well nearby.

"A halt on all activity and a full investigation of this incident should now be required until all the issues are made clear."

A NT Department of Primary Industry and Resources spokeswoman said Origin advised the department, as the regulator, it had an operational problem with their current exploration drill hole.

"Having assessed the current operation, Origin have decided to abandon the section of drill hole and drill a new horizontal hole," the spokeswoman said.

"As regulators, DPIR was informed of the planned abandonment of the section, as they need to comply with our regulations.

"The decision by Origin to hydraulic fracture this well will be made once the exploration drilling has b

Poods: And we shall continue to have to agree to disagree! Not going there again. Maybe R/S should be your first name and not your middle :^)

Poods: Come on guy: That new management team comment was poking a little fun at some of the stereotypical topics of posters the board - you have to admit you pushed the R/S long and hard. Same with BO - he is always saying if he thought we should drill through the moratorium (where and into what formation we don't know - just get the damn holes drilled!). As to Namu, he and I have constantly bantered about various topics and IMO he is always wrong LOL! - though he thinks the same about my crystal ball. All three of you guys have your barbs out for POQ so I lumped you in the same 'new management' team.
You and I both have a significant investment in Falcon and therefore both of us are after that same gold ring. Tuck in that lip and lighten up a little! It was all in good spirits.

Sandy/Newtofo: Thanks for the comments. We are fortunate to have Origin - there was a good reason Origin was picked from amongst several companies interested in the Beetaloo Project. Philip wanted a very reputable solid company which we have to admit paid off in spades when the NT slapped our Beetaloo fracking project with a moratorium. Origin served an intricate part with the Judge Pepper scientific panel and its establishment of the 135 new regs. Origin's trusted reputation and relationship was instrumental in working through this government mandated fracking regulations process . Then consider all the extensive required paperwork/research requirements for the civic, environmental and drilling permit applications - Falcon was fortunate to have Origin's expertise and personal to put all that documentation together. Some fail to see the complete process involved in getting this controversial fracking process through the government - all they want to look at is the bottom line cost/speed - simply how fast/cheap we can drill the Kyalla.
IMO we are being well served by Origin and owe a big thanks to POQ for helping establish that relationship.

Darnit: Sounds like you need to be on the sideline. IMO Origin is like a Chevron here in the PB. They are slow and methodical but you can be assured they follow the rules and regulations. - a company could go with a smaller less bureaucratic operator and get someone cheaper and quicker but that's a bit of the roll of the dice. In the NT a much lesser know operator would have likely never been approved for a permit - much less give Falcon a $200 million farm-out. Another thing you and others don't seem to appreciate is that this is a first time Kyalla horizontal and only the second horizontal shale well in OZ. The well is located in the middle of nowhere and you surely can appreciate that logistics are probably a nightmare - things are naturally going to move slowly and cautiously.

If you are not comfortable with the contractor you need to be out of the stock - really doesn't make me any difference what you are anyone on this board elects to do. I am confident with Origin being the operator and I have tons of faith in Philip. The sloughing off of the formation was no one's fault - you could have searched the world over for an expert in drilling horizontals in the Kyalla - you would have come up empty handed. The Kyalla is an unknown and it brought with it unforeseen problems - that's part of the learning experience of being the Kyalla's first exploratory horizontal test well. Something else - it is probably not the last leaning experience Origin/Falcon will have.

I had to chuckle over the board members doing a better job. Maybe you should put the drilling contractors hat on BO and you, Poods or Namu as CEO - that would be a royal cluster f*** but you could have drilled all your wells while in the moratorium, reverse split the hell out of the stock or been wrong on every move or prediction the company made. It always amazes me how stock boards always seem to have much smarter, better experienced people posting on their board than the professionals running a company - you seem to follow that line of thought.

Good luck wherever you end up. Please do us a favor and move on to something that lets you sleep better at night.

Here is a quick Falcon snapshot update from ProActive that was posted yesterday - January 13th. There is a nice 4 minute YouTube video by POQ at the end of the article. I apologize if this has been previously posted.

https://www.proactiveinvestors.co.uk/companies/news/910449/today-s-oil--gas-update---falcon-oil--gas-petrotal-brent-oil-and-more-910449.html

BO: As we know from the AGM, if the Kyalla comes in as we hope, Origin/Falcon would like to skip the last stage2 well and move straight to stage3. From the early indications the Kyalla looks very promising. If the Velkerri wet gas is dropped then Falcon should have plenty of remaining carry to see them through this program.

IMO, the biggest problem with the 6 week delay is it might shorten the window for a 90 day EFT. This will force a quicker decision on whether to proceed to the Velkerri wet or keep the rig in place and drill 2 stage3 Kyalla wells.

If the remaining stage2 well (Velkerri) is drilled then I can see a scenario where there could be an additional raise required.

IMO yesterday's release carried more good news than bad - a solid Kyalla well will pretty much insure commerciality of the Beetaloo and should put Origin back on schedule. Keep your fingers crossed!

BO: Haven't learned anything??. Two completely different formations/problems - a little unfair to imply they didn't learn anything about the Kyalla formation from the Vlekerri formation!
The Amungee well was a horizontal drilled in the Vlekerri formation - it ran into a natural formation fracture - it was an unfortunate situation. The Kyalla is in a completely seperate formation that has NEVER been horizontally drilled/fracked - I can assure you that Origin has now learned quite a lot about the formation's characteristics/structure. They have learned that a different composition of drilling mud will support the hole - it was definitely an expensive learning experience but so it goes in a new unknown drilling environment. At the end of the day I am sure there will be additional 'learning experiences' on drilling/fracking the Kyalla. As I said before I doubt they get it completely right the first rattle out of the box - the first few Kyalla wells will continue to bring additional engineering knowledge.

Hydrogen: The Kyalla is a new formation - never to have drilled horizontally. From what I understand the sides of the well bore were sloughing off and the resulting hole was not clean enough to run pipe. It was likely just a management issue due to the unknown conditions of a new downhole environment. It should not be a big issue to overcome by using a different consistency of drilling mud to help support the hole. Yes its a setback but overall the news release gave me much hope - there appears to be great gas/condensate shows in what appears to be an already highly fractured continual formation. I heard that Origin could have tried to run pipe on the 700 meters but that could have resulted in additional problems plus Origin is wanting to show gangbuster results for a 1500 meter hole.
The six week setback is manageable - the biggest problem I can see is it may shorten the EFT evaluation window before making the call to bypass the remaining stage2 well and proceeding directly to stage3 drilling offsetting the Kyalla well as was mentioned at the AGM.

Overall a setback but this cloud has some nice silver linings!

Hey Knight: I can't really take credit for that - You need to thank POQ. Nice to see the stock upticking for a change. However, it has a long way to go to get back to my expectations.

Knight: Sigh :^( I wanted to fulfill your previous life's 'Nanmu" wishes of wanting people to post negative articles along with the positive. Sounds like the NT needs to scrap LNG/gas/fracking plans and instead go with Tourism and solar. The NT needs to get away from burning dirty nasty gas. For your enjoyment!

‘Sneaky’ Christmas present from Environment Minister
Sir – We condemn the sneaky – but not surprising – decision by NT Environment Minister Eva Lawler (pictured) to sign off on Origin Energy’s Beetaloo Basin fracking plans just two days before Christmas.

The decision came shortly before it was revealed the NT increased its LNG output by 153% in 2019 to more than 10.5 million tonnes, further proving the Territory has no need to undertake dirty and polluting fracking to find more gas.

The timing of the decision was typical of the NT Government, and showed it was trying to avoid scrutiny over its support for fracking.

This was an outrageous and underhanded way of wasting millions of litres of the NT’s water on dirty and dangerous fracking projects in the Beetaloo Basin.

Origin admits that one fracked gas well can use up to 60 million litres of water. We can no longer allow this kind of insane environmental degradation to take place upon the driest inhabited continent on earth.

As well, if gas companies like Origin and Santos are not stopped by communities, they will release 22 billion tonnes of CO2 equivalent into the atmosphere equating to more than 20 years of Australia’s annual emissions.

The NT’s precious natural resources shouldn’t be put at risk so massive companies could sell dirty, polluting gas to the highest bidder overseas as the NT is already producing record volumes of gas exports.

If the Northern Territory is looking to create long lasting jobs for the decade ahead, international projects like solar power exports and world-class tourism will attract investment without the pollution impacts.”

Dan Robins
Protect Country Alliance

https://www.alicespringsnews.com.au/2020/01/11/sneaky-christmas-present-from-environment-minister/

Darnit: Hope your right on the 30% not being an issue.
As to the "very expensive/wasteful model" keep in mind that the Kyalla is an appraisal phase well. Once development drilling begins cost will drop as efficiencies are realized as infrastructure begins to build out. Origin is currently drilling/operating out in the middle of nowhere drilling what will be only the second horizontal shale well in Australia. Though I am sure Origin has brought in experts/consultants, I expect there is still a lot of care and caution being practiced along with substantial delays in delivery material/parts etc.
Origin is a solid operator and I suspect any future partner would be comfortable with their first class operations. When Origin begins drilling up to 16 wells/pad and builds out a hard surfaced road infrastructure along with supply yards within reasonable distance the cost/drilling times will drop - INPEX, Santos and potential partners recognize this.
We have heard that if the Kyalla is highly successful Origin/Falcon might forego the Velkerri well and go straight to the stage3 wells offsetting the current Kyalla well - just walking the rig a few feet and drilling one well after the other and then moving in the fracking equipment doing the same will lessen the cost of these wells.

Nerves - Thanks for looking that up - just glad it wasn't my quote - that would have really concerned me!!
As we all know, the Beetaloo is a huge potential asset and POQ told me he expects to get the top dollar for this 'once in a lifetime opportunity' - he has no interest in using a third party in the sell - he wants to look potential buyers eyeball to eyeball and get the last dollar out of the deal. My only question is the amount of the discount someone other than Origin will apply as Falcon's minority interest - this is why I keep coming back to the 30% undivided interest. Falcon and Origin knew this was an issue going into the farmout so hopefully that has been accounted for. At the end of the day no one is going to steal this asset based on Falcon's share price - that doesn't compute.

Nerves: I would be interested in knowing where that quote came from. I was in attendance at the 2018 AGM meeting and recall no such comment. I also had a nice lengthy visit with POQ after that meeting and I can assure you that it was not his comment. In fact his opinion is what I have always expressed - companies will be bidding on the proven assets of the Beetaloo - the sales price has nothing to do with the price of our penny stock. INPEX, Totale, Santos etc. will be bidding for 30% of the Beetaloo's proven resources/reserves - the current s/p of Falcon does not enter into that equation.

Newtofo: One might add for those that aren't as intune - Origin did a DFIT stimulation on the Kyalla formation prior to electing to proceed with the horizontal bore. The DFIT is just another tool used to evaluate the formation prior to proceeding with the horizontal and subsequent full blown frac job. Google Definition of DFIT: "The purpose of the DFIT™ test is to obtain essential reservoir properties in a relatively short period of time. The DFIT™ test is the primary empirical method that helps determine fracture design parameters (i.e. closure time, closure stress, net pressure, fluid efficiency, dominant leak-off mechanisms, etc.)." This doesn't tell me a whole lot but I'm sure a reservoir engineer gets much more excited over the resulting DFIT data :^)

The decision to proceed with the horizontal was/is the most important news to date on this well - next up and even more important is the EFT results. I'm repeating myself but I was told there will be a 24 hour preliminary flow test after the well cleans up. That 'might' be followed up with an 'operational' update mid-way thru the flow test and then of course the final test results.

GLA

As others that have stepped to the side - I got tired of constantly hearing from all the POQ whiners. As BO said, nothing much to be discussed right now - IMO that resulted in the board turning to constant CEO complaints. I, as others, are still monitoring the board for news but until something of relevance develops, I decided to step aside and be in 'monitoring mode'. As Origin/Falcon begin issuing news on the Kyalla and the next Velkerri the board will likely regain some of its value to Falcon investors.

Cheers and GLA

Newtofo: I'm inclined to follow your lead.

Knight: Go ahead and post as Namu. No need to try to hide from your past.

I don’t think the price is being held down by anyone IMO it is an orderly liquidation by the holders of the Sweetpea stock. Just not enough demand for the stock - that will change with good news

Poods: IMO you are missing the point. It's not the $$$ involved - here in the Permian Basin we see multiple billion dollar deals a year. The issue IMO is that we have an undivided interest which can limit your buyers - companies aren't as willing to pay full asset value for a minority interest - the value will be discounted. I'm not saying this can't be worked out - IMO Origin will be in a better position to give Falcon what it wants as long as they don't try to take advantage of that situation - after all we are talking about significant dollars.

As to Rich's comment if Origin wants to reduce their interest, which I believe they will do, then yes they sell off a given block but then which block? Falcon would want Origin to sell the most valuable block to obtain the highest value where Origin might want to sell off less proven acreage. The water gets murky in a hurry and it gives me a headache even thinking about it - I don't think there is any way we can sit here on the outside and predict how this plays out. At the end of the day Falcon will be seeking a fair price for its assets and then they and Origin need to work out the best possible solution - it will be interesting to see how it plays out.

Darnit: I am still wondering how Falcon is going to sell their 30% undivided interest to anyone other than Origin. Yes - INPEX or another outside party could buy it but would these companies want pay up for a minority interest? Having controlling interest, the Beetaloo will be worth more to Origin than to another third party so their price would likely be the highest. To carry this a step forward, is it in Origin's interest for Falcon to potentially participate in an additional year of drilling to prove up more assets? If additional assets are proven then it's going to cost Origin more to purchase Falcon's interest. It appears to me that there will come a time when Origin and Falcon's goals don't really align. I keep telling myself that this is not the first rodeo for these guys so maybe there is some type of agreement in the farm-out provisions to facilitate a sale since that has been the goal all along. Time will tell.