Ann: Nicolay No 1 Weekly Drilling Update , page-7

Crespo007

Now we are at the top Bongabinni formation. This is a very interesting formation. NSE is targeting it but not mentioning much about its detail. It might be because they don't want to create high expectations about it as their main target is Nita and Goldwyer.

However we know that it has extrememly high TOC (total organic carbon) levels (up to 62%, while 3% is very good). But it is not know very well by the geos here in Canning. They think it might be patch. I am not a geo but I don't think so. According to my research it covers everywhere in southern Canning. It is encountered in many wells both at north and south of Nicolay-1 well location. I believe it will be encountered in Nicolay-1 location too.

It is basicaly a shale formation with high TOC levels. If we can encounter it over a 50m and if it can be fractured, it would be a very rich source of hydrocarbons.

Nita is considered as a reservoir rock but not a source rock. That means Nita can hold HCs. The source rock could be Goldwyer while Goldwyer still can hold HCs. If the HCs migrated to Nita we'll find it there.

Free oil flow? Not expecting it as NSE is not expecting it either. It might be recovered by fracturing but not free.

Free gas flow? I am expecting it. From Goldwyer. We'll see.


Now this exploration program is being done in two parts.
1- is at the site by visible and scaleable observations
2- is at the lab.

This was giving on NSE's anns as below. What we are interested in for now to know about the visible observations. They may come out as the visible hydrocarbons, like free gas or oil from the well bore, core observations like the colour of shales from the cores (black or grey, etc), the thickness of those shales, mud logs, hydrocarbon saturations, etc.

All of those things will give us a lot of indication about the richness of HCs down there.

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From NSE anns;
"Coring program throughout Nita and Goldwyer formations

- Core recovery and visible observations
-Hydrocarbon indications (mud logs, core observations)
- Confirmation of section thickness throughout Nita and Goldwyer
-Electric wireline logs (reservoir information, hydrocarbon saturations)

Scientific analysis of core confirming key parameters
- How good is the rock and what does it contain? (ie: source rock and reservoir quality)
- How good is the container? (ie: how much is still in the rock)
- How well does it break? (ie: can we break it to extract the remaining hydrocarbons?)"