Falcon Oil & Gas Ltd. notes that production testing has now been completed and the well shut in at Kyalla 117 N2-1H ST2 (“Kyalla 117”) in the Beetaloo Sub-Basin, Northern Territory, Australia with our joint venture partner, Origin Energy B2 Pty Ltd., a wholly owned subsidiary of Origin Energy Limited.
As noted in the Company’s press release on 20 July 2021, while Kyalla 117 flowed liquids-rich gas without assistance for intermittent periods, production was not sustained and there were indications of a potential downhole flow restriction.
On 14 September, coil tubing operations recommenced at Kyalla 117. No apparent restriction or blockage was identified in the production casing. Following a nitrogen lift, the well was able to flow unassisted at rates between 0 (i.e. rates too small to measure) and 1.5 MMcsfd for five days before loading up with water. Gas compositions data are not yet available but gas specific gravity data is similar to that measured during the previous phase of testing. Trace condensate was also observed.
Further analysis will be undertaken, including additional core analysis and well design considerations, to enable a conclusion to be reached on the results from operations at Kyalla 117, which will inform the future approach to further drilling and testing of the Kyalla play in the Beetaloo Sub-basin.
The purpose of the current exploration campaign was to collect data across the three primary plays within the permits: Velkerri dry gas, Velkerri liquids rich, and Kyalla liquids rich. Despite the challenges, the Kyalla remains a viable target within the Beetaloo. Kyalla 117 was the first horizontal well targeting the Kyalla and achieved its primary technical objective of demonstrating liquids rich gas flow potential of the Kyalla.
Recap on the gas composition
The initial analysis of natural gas by gas chromatography confirmed a liquids-rich gas stream low in CO2 as follows:
• C1 = 65.03 mol%
• C2 = 18.72 mol%
• C3 = 8.37 mol%
• iC4 = 1.29 mol%
• nC4 = 2.03 mol%
• C5+ = 2.73 mol%
• CO2 = 0.91 mol%
• N2 = 0.92 mol%
The elevated C3+ gas component of 14.42 mol%, confirmed the Lower Kyalla Shale as a liquids-rich gas play. Gas composition data also support the view that the Kyalla gas stream will have elevated LPG and condensate yields.
Philip O’Quigley (CEO of Falcon) commented:
“The information collected from this first horizontal well drilled in the Kyalla liquids-rich play, including the elevated liquids component, confirmed that the Kyalla remains an attractive target for further appraisal. Our immediate focus will now turn to the Velkerri play area where we are currently drilling a new exploration well in the potentially liquids-rich flank of the basin; an area of key interest for the Beetaloo Sub-basin. We look forward to updating the market as soon as the results from this well are available”