EXR - QLD gas project update
Our energy Investment Elixir Energy (ASX: EXR) is now a few months away from flow testing its QLD gas project.
Late last year, EXR drilled its Daydream-2 well in QLD going for gas.
So far, EXR hit exactly what it expected across the unconventional gas bearing zones & hit a surprise free flowing gas section…
Here is what happened:
- EXR was drilling an appraisal well targeting primarily an unconventional tight gas structure - EXR hit gross pay of ~607m of the unconventional gas structures. A few weeks later EXR announced ~154m of net pay across these structures.
- The unexpected news was that EXR hit a conventional section at the end of its well flowing free gas to surface. Field estimates were for ~50,000 cubic feet of gas - which had to be flared...
EXR was expecting to find an unconventional gas reservoir and then stimulate (frack) it to flow gas - like the other discoveries in the region.
Finding free flowing gas in deep sections has significant implications for the entire basin, and especially for EXR’s permit area where it was actually found.
We covered that big news in our last EXR note here - Did EXR Just Unlock Another Australian Deep Gas Play?
EXR’s update today:
This morning, EXR put out an update on all the test work being run on the Daydream-2 well data.
Here are our key takeaways from the announcement:
- EXR hit three different gas bearing sandstone reservoirs
EXR confirmed that petrophysical log analysis shows there are three distinct sandstone reservoirs that are gas saturated across gross thickness of ~12m.
EXR also confirmed that these reservoir units would be included in the company’s 2024 flow test.
- Porosity for the deeper reservoirs are a lot better than expected
EXR also confirmed that porosities >10% were logged across the sandstone intervals, which is way above levels typically seen in similar reservoir structures.
Porosity is important because it gives us an idea of how likely the reservoirs are to be commercially viable and how well they might perform in future flow tests.
Generally, the higher the porosity %, the better.
- Logging data showing similarities to nearby Dunk-1 well.
EXR also confirmed that the logging data is showing correlations “with the Lower Lorelle Sandstone identified in the well reports from the Dunk-1”.
The Dunk-1 well is ~26km away from EXR’s well & was drilled by BG Group (now owned by Shell) ~ 10 years ago.
The significance of this is that it could be a sign the gas bearing reservoirs on and around EXR’s acreage extend across 10’s of km.
What come’s next for EXR’s QLD gas project?
EXR expects to have some of its flow testing equipment on site in the next few weeks.
Before that we expect to see more lab testing data & more detail around how EXR plans to run its stimulation/flow testing program.
Below is a timeline EXR put out in today’s announcement:
