Ann: Daydream-2 Operations Update, page-242

Here are the facts about the Lorelle Sandstones:

As per the ASX Announcement dated 10th November 2022, contingent resources of 395 billion standard cubic feet of gas (2C) have been independently certified by international firm ERC Equipoise Pte Ltd. Critically, ERCE assigns contingent resources to the tight sandstones of the Permian aged Kianga Formation and Back Creek Group only, as these are the origin of the gas flows in nearby wells.

The estimation of the contingent resources is based on the results of previous drilling in the same Taroom Trough play, immediately to the West, North and East of ATP 2044. The fractured thermal mature coals remain an exploration target and have not been evaluated by ERCE.As per the ASX Announcement dated 5th April 2024, the Lorelle Sandstone initial flow test was highly successful – with a maximum rate of 2.3 Million Standard Cubic Feet Per Day (MMSCFPD) and stabilised flow rate of 1.3 MMSCFPD (through a 20/64 choke).

Following stimulation, data acquired during the Lorelle Sandstone flow periods has been used to predict the initial gas flow rate and ultimate recovery for each well from this lowermost zone. Elixir’s technical and economic modelling indicates the Lorelle Sandstone alone could produce a commercial flow rate of gas, with the breakeven commercial initial flow rate being estimated at 2.5 million cubic feet per day.

Basically this reads to me that, following stimulation, they were getting flow rates of greater than 2.5 million cubic feet per day from the sandstones (so an increase of approx. 100%) but due to the short testing period they can't take it as fully stabilised and therefore had to model the expected drop-off and resulting stabilised rate (of 2.5 million cubic feet per day).

TL;DR, we have 398 bcf of recoverable gas in the ground from 1 of 6 zones that has been communicated to be commercial with the possibility of increasing that contingent resource and converting it to proven which would be worth ~$400M by itself. All without testing the remaining 5 zones and from a zone that wasn't even expected when planning the drilling campaign.

Not financial advice, all in my own opinion.
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