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Ann: Tamarama 3 Reports Initial Flow Rate of 2.5 mmcf/day, page-68

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Sharetrader78

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30/01/19

13:30

Post #: 37264705
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Originally posted by Meledath ↑

Originally posted by Michaeljob
With the wells now flowing it's possibly worth a revisit of some of my old modelling and assumptions, noting that the gas price is no longer $7/TJ but now $9-12 and cooper basin majors are now reporting drilling and completion costs of around $2.4m. RLE also have a few series of options out there ripening up ready to assist with any funding required to get this field into production.
https://hotcopper.com.au/threads/re...3630846/page-37?post_id=26793192#.XFBPMlwzaUk
"With it now approaching a fortnight since the last update on well performance it is timely to consider the required outcomes from the flow testing results and the rates that might be required to prove the field as commercially viable. From earlier announcements we know that Tamarama exploration well was completed with 5 fracture stages of which apparently 2 stages were identified as the most likely productive zones. In future drilling and production focused completion activities these 2 zones will likely be the sole targets with the non-productive zones excluded to ensure maximum bank for buck.

Commercial flow rates depend on several factors;
Gas price
Since the beginning of the project gas prices have increased from around $4.50/GJ to current long term contract prices of $7-8/GJ (the large dip was due to a flooded market before the LNG trains started)

Well drilling and completion costs
In 2014 when the first 2 wells were drilled they were at a cost of around $6.5m/well, since this time there has been a large reduction in drilling costs, partly due to improved technologies and party due to the increased competition in the sector during the downturn in drilling. Other Cooper basin operators have targeted a 50% reduction in drilling and completion costs. From previous R&D rebates it appears that around 40% of the exploration costs are subject to govt rebates giving quite an attractive exploration pricing guide of around $3.1m/well (assuming we can get the same price as the big guys)

Infrastructure to get gas to market
The MoU signed with STO and proximity to existing pipelines give RLE and fairly low CAPEX method of getting gas to market. The Weston MoU with prepayment allows RLE to fund the required infrastructure based on future sales.

Well flow rates
Given that we are expecting to see flows based on 2 productive stages I have done some modelling based around 0.5(mid) to 1.0mmcfd/stage (high), 1.0mmcfd from Tamarama would imply for instance that a 5 stage stimulation targeting only the 2 productive zones would deliver a well capable of producing at an initial flow of 2.5mmcfd if the well produces at 2.0mmcfd then my thoughts are that 5.0mmcfd will be possible from future completions. Given that we are dealing with tight sandstone formations the decline curves are quite aggressive. "

hi Michealjob are you trying to say the wells will not be commercial for long term? do you believe that gas decline will be aggressive in sandstone formation? any substantiating reading material to share that view please.

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I understood going off "breakaway research report" that CBG a constant flow-rate should plateau for 15 years, followed by natural decline ??

And the two weeks of flow-testing to book reserves should well give an indication of longer-term flow rates?

I understand CSG declines and needs yearly workovers to keep flowing at optimal rates

As to the major upside, RLE gives if they can prove a commercial CBG project ...

RLE Price at posting: 9.1¢ Sentiment: Buy Disclosure: Held
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