Unless you are referring to the flow needed to break even, in...

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BasVermeulen

644 Posts.

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29/04/24

19:28

Post #: 73566435
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Originally posted by jctrout: ↑

Love the optimism but the announcement definitely DOES NOT say that the current resource is economically viable. It does however say that it COULD produce commercial flow rates (typical NY carrot leading approach to retail). EXR are still in the pre-proof stage of development.

What NY hasn't disclosed is the modelled resource volume (net recoverable) and ALL assumptions of the model. There is a lot of cherry picking and questionable disclosure in this announcement but net recoverable resource is the key point to commerciality, not initial flow rate. no permeability results announcement after the labs were returned should be a RED flag here, as pressure values used instead correlates to geological pre-conditions and not net pay. This is conflation and in my view, deliberate miss-representation of true value.
Reality is that the logs show a semi-conventional pocket of ~1.5m section producing the gas free flow, the rest is tight gas. Most of the >10% porosity mentioned is in fact the surrounding geology and not the sandstones themselves. - i.e. the gaseous sandstones holding the gas are more dense than the gross porosity numbers suggested by NY, hence the stimulation requirement and the non-commercial conventional flows. You'd also be a chance that the stimulation hasn't gone to the sandstones either because of this density differential and it's ended up in the coals surrounding them. Post stimulation results only increased flow rates by 0.2-0.3 mmscfpd, basically 10-15%, indicating that permeability is not positively influenced by this approach. That is a real problem for commerciality as the gains are marginal for the risk.
Also, density/porosity inversion shows that gross recoverable section may be <4m out of the supposed 12m gross pay section tested.
Given the flow rates and response to stimulation, I'd say that this is a tight gas system and the permeability and pay is crap.
As such, you'd be lucky even with stimulation to get an aerial extent greater than 2km2 for the net pay here, restricting the interpretive net recoverable resource even more. high pressure in this section at this depth is a function of local geology, not analogy to any other supposed regions such as Perth Basin. Anyone who dares suggest this is definitely pumping their lot up very hard - another red flag.
All results thus far are unrisked values. Once risk is applied, you'd get less than 20% of the net pay from this well applied, so Grandis would need another 6-8 wells like this to generate a risked value of any real appetite for the big guys.

Happy for constructive feedback, but if you're slagging just to make yourself feel better after backing this dog with all the evidence in front of you, then sorry but your pride will have to take the hit.

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Unless you are referring to the flow needed to break even, in which case: you are right, the flow rates ONLY need to increase by 0.2-0.03 mmcfpd from the pre-stim number to break even. And that is even without fracking and flowing the other zones.

Last edited by BasVermeulen: 29/04/24

EXR Price at posting: 13.0¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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