Falcon Oil & Gas still has lots of potential at Beetaloo say brokers


Falcon Oil & Gas Limited (LON:FOG) still has the opportunity to make a significant gas breakthrough at the Kyalla 117 N2-1H ST2 well, analysts said today after the latest update.

There was some gas observed, but a measurable gas breakthrough had yet to occur Falcon said, while data indicated higher pressures in the horizontal section of the well than in the surrounding reservoir.

To lower the pressures in the well, Falcon and partner Origin Energy will re-enter the well with coiled tubing and apply nitrogen lift.

This is a technique that is used extensively across the oil and gas industry and was previously applied to the successful Amungee NW1-1H well tested by the two companies in 2016, said Cenkos

The broker added that drilling elsewhere in the Beetaloo basin (in the Northern Territory) continues to indicate vast reserves of gas.

Most recently, Santos together with its partner Tamboran Resources has submitted a gas discovery notice at the Tanumbirini-1 well, around 100km to the east of the Origin/Falcon JV Amungee-NW1H discovery.

For Falcon, the results of the Tanumbirini-1 well confirm the Middle Velkerri’s prospectivity and, in turn, underline the Beetaloo’s enormous potential.

The broker added that the 6.6Tcf of gross contingent resources discovered to date by Falcon/Origin is just associated with the immediate area around the Amungee NW-1H well, and only include the Middle Velkerri B shale (excludes the Middle Velkerri A or C shales).

Elsewhere, Empire Energy has completed the drilling of the Carpentaria-1 vertical exploration well, 150km east of the Kyalla 117 N2 well.

An initial evaluation has established that the Velkerri Formation in EP187 contains liquids-rich gas across multiple pay zones, with thicknesses, gas saturations and porosities comparable to other wells in the Beetaloo, said Cenkos.

The broker also highlighted the need for gas in Australia, with the government recently announcing a gas reservation scheme that identified Beetaloo as one of five ‘Strategic Basin Plans’ for the country.

“Based on all the other technical information gathered to date, we remain optimistic on the potential of Kyalla liquids-rich gas play,” Cenkos added.

“We maintain our target price at 39p and BUY recommendation.”

SP Angel added that it is not unusual in shale plays to observe the salinity and density of the flowback fluid to increase as salt easily migrates from the formation.


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