Highlights:
- Stimulation activities on Horseshoe #4 successfully completed on time/on budget.
- Horseshoe #4 proceeding to flowback, clean-up and re-connection to the gas gathering network.
- Stimulation equipment relocated to Horseshoe #2 to commence 2-stage stimulation programme.
- Stimulation programme expected to be completed and all wells online by the end of November.
The Board of Armour Energy is pleased to provide an update on the Surat 2020 Work Program which is being conducted on its 100% owned and operated Kincora Gas Project.
Stimulation activities on Horseshoe #4 successfully completed – on time and on budget
Armour has successfully completed the stimulation activities on the Horseshoe #4 well, a single-stage stimulation of the basal Rewan sandstone over a 4-metre interval between 1936 metres to 1940 metres. The programme was successfully completed utilizing approximately 82,000 lbs of proppant into the target zone.
Prior to conducting the stimulation, the Company conducted a DFIT test (diagnostic fracture injection test) and to improve formation contact for the stimulation, reperforated the target interval. A postreperforation DFIT was conducted and the targeted basal Rewan interval demonstrated a significant improvement in stimulation conditions. On Sunday, 1 November, the target interval was then stimulated exactly as planned with all proppant placed. Within a couple of hours after the completion of the stimulation, wellhead pressure was recorded at 2000 PSI, which is an encouraging sign that the target basal Rewan interval is likely to produce at the forecasted production estimate.
A production string will now be installed, and the Horseshoe #4 well will commence the clean-up and flowback phase prior to returning to sales gas production. The Company will provide further information on the well flow rate and the outcome of the Horseshoe #4 stimulation programme.
Overview of Horseshoe #2 stimulation programme
The Horseshoe #2 well was originally drilled by Oil Company of Australia in 2002 targeting the intra Wallabella and upper Tinowon sandstone, with the basal Rewan as a secondary target. The upper Tinowon was absent but the intra Wallabella sandstone was gas saturated, connected, and put on production in 2009. The basal Rewan was considered prospective at the time, but not completed in the Horseshoe #2 well.
The Horseshoe #2 well is connected to the Horseshoe gathering system which is connected by an 8km flow line to the Myall Creek Compressor Station.
Since the Horseshoe #2 well was brought into production, the Company has identified significant wellbore damage including fill in the open hole section, which inhibits the potential for higher gas flow rates. The open hole section over the intra Wallabella was recently and successfully cased and cemented in place. It is expected through recompletion and stimulation of these low permeable reservoirs, that production can be significantly enhanced, from both the intra Wallabella and basal Rewan formations.
The Horseshoe-2 programme is planned to be a two-stage stimulation of the intra Wallabella sandstone and the basal Rewan sandstones. The intra Wallabella stimulation is planned to be over a 5-metre interval between 1937 metres to 1942 metres. The programme planned is a large stimulation utilizing approximately 95,000 lbs of proppant.
The basal Rewan stimulation is planned to be over a 14-metre interval (5 meters of perforations) between 1791 metres to 1805 metres. The programme planned is a larger stimulation utilizing approximately 120,000 lbs of proppant. The result is expected to deliver a strong commercial outcome with a quick payout which will allow the invested capital to be quickly recovered and reinjected back into future programs.
Following completion of the stimulation of the target intra Wallabella sandstone and the basal Rewan interval, the well will go through a clean-up process to recover stimulation fluid. After the clean-up phase, the Horseshoe #2 well will commence flowing gas into the Horseshoe Gas Gathering System for processing and sale via the Kincora Gas Processing Plant. It is anticipated that the Horseshoe #2 stimulation programme and clean-up process will take approximately 10 to 14 days. The Company plans to provide updates on the Horseshoe #2 stimulation programme upon completion of the stimulation programme and clean-up process and when gas commences flowing into the Horseshoe Gas Gathering System and again after the Horseshoe #2 well has been producing for 30 days on a stabilized basis.
Stimulation programme – Next Stages
Following the completion of the Horseshoe #2 stimulation programme, Condor will mobilize the stimulation equipment to the Warroon #1 well location to conduct a single-stage stimulation programme targeting the Rewan sandstone interval directly under the Showgrounds sandstone, which has been the primary production interval for the Warroon Gas Field.
The entire three-well stimulation programme is expected to cost approximately $4.7 million and to be completed by the end of November 2020 with all three wells producing and flowing gas into Armour’s Surat Basin Gas Gathering System to the Kincora Gas Processing Plant for additional gas sales.
The programme is targeting achieving an aggregate initial increase in daily sales gas production of approximately 4 TJ/day (Best estimate) with a potential aggregate high-side outcome of up to approximately 7 TJ/day sales gas (High estimate).
The 2020 work program has been designed not only to increase production from existing well stock, but to capture learnings that can be incorporated into additional production enhancements efforts.
Results will be used to optimise Armours next program which is planned for the first half of 2021. Additionally, these two programs are expected to support the de-risking of new drilling locations and contribute to the reserves maturation plan.
Armour Energy’s CEO, Brad Lingo said:
“While it’s early days, signs from Horseshoe #4 look very promising. Completing the pre-works and commencing the stimulation programme on time and on budget, and delivering a textbook execution of the first stimulation at the Horseshoe #4 well, is a great result. It is a credit to the hard work and meticulous preparation that the team has put into the planning and execution of the campaign. We are very focussed on continuing this level of execution and being able to deliver the increase in daily sales gas production.”