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Falcon Oil & Gas continuing the advance into Beetaloo's shale potential

Snapshot

  • Beetaloo is the focus, followed by South Africa and Hungary
  • Vertical drilling in new Kyalla well confirms thick shale
  • Kyalla well set for sidetrack horizontal to overcome challenges
  • Exploration and appraisal programmes ongoing through 2020
Northern Territory

Quick facts: Falcon Oil & Gas Ltd

Price: 11.75 GBX

AIM:FOG
Market: AIM
Market Cap: £115.37 m
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What Falcon Oil & Gas does:

Beetaloo - Falcon Oil & Gas Ltd’s (LON:FOG) (CVE:FO) (OTCMKTS:FOLG) Australia arm holds a 30% interest in 4.6mln gross acres in exploration permits EP76, EP98 and EP117 covering the most prospective core area of the Beetaloo Sub-basin.

The Beetaloo Sub-basin is located in the Northern Territory, 600 kilometres south of Darwin and close to infrastructure including a highway, a pipeline and a railway.

Karoo Basin - Karoo covers an area of 7.5mln acres. Falcon submitted its application to the Petroleum Agency of South Africa in 2010. 

Mako Trough - Falcon has been active in the Makó Trough since 2004 when it acquired the Makó and Tisza exploration licences

How is it doing:

Operationally, the focus is on the ongoing work programmes in the Beetaloo basin, in Australia’s Northern Territory.

The exploration and appraisal programme include the drilling and hydraulic fracture stimulation of two horizontal wells.

In October 2019, the first well - Kyalla 117 N2-1 - was spudded. It is the first well in the ‘Stage 2’ drill programme at Beetaloo.

The vertical section was drilled down to 1,895 metres, and, confirmed some 900 metres of ‘thickness’ in the targeted shale. Horizontal drilling subsequently aimed to extend across between 1,000 to 2,000 metres within the shale for future fracture stimulation and production testing programmes.

On 13 January, Falcon told investors that the original horizontal Kyalla well had encountered problems after completing some 700 metres of horizontal drilling, and, to remedy, the well would now be sidetracked.

Sidetrack drilling will start in February. Despite the operational set back, Falcon said that results obtained to date show the target shale formation has good reservoir continuity, conductive natural fractures, and continuous gas shows.

The Kyalla well is located some 32 kilometres from the prior Beetaloo W-1 well and it is targeting the shale liquids-rich gas play.

The Beetaloo shale project, 30% owned by Falcon, is estimated to host some 85 trillion cubic feet of technically recoverable gas resources.

Falcon and partner Origin Energy are working to expand the known footprint of the shale play whilst also exploring and de-risking the engineering and commercial understanding of the project – ahead of what could be a very large-scale development.

Huge volumes of gas could potentially be unlocked for export into energy hungry Asian markets.

Karoo, Mako

In South Africa, Falcon expects the exploration right over the acreage in the Karoo Basin will be awarded this year

This licence is about 173 million acres and contains thick, organic-rich shales such as the Permian Whitehill formation.

Falcon is continuing to review its operations in Hungary, which includes the Makó Trough. 

Inflexion points:

  • Drilling progress at Beetaloo
  • Drilling, fracking and production test results
  • Exploration licences granted for Karoo Basin acreage

What the boss says:

Falcon chief executive Philip O’Quigley said: “Whilst it is unfortunate to have encountered these operational difficulties, which will add to the time and cost to drill the horizontal section, the JV remains as optimistic about the potential of the Kyalla and we look forward to updating the market with further updates in due course.”

 

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