The Warro 3 flow test program continued last week with an isolation bridge plug set above fracture stimulation zone 2, aiming to eliminate the flow of water into the well bore from the bottom of the well. Upon recommencement of flow testing after setting the bridge plug, the well successfully flowed gas for 9 hours without water infiltrating the well bore. During this period the gas flow rates were significantly higher than recorded during the flow test program to date, with an initial gas flow rate of 5.6 mmcfpd recorded 4 hours after the well was reopened (for the first four hours the separator was not in operation). After 9 hours of consistently strong gas flow, water began to re-enter the well bore and the gas and water flow rates returned to the levels recorded over the previous 2 weeks. A second isolation bridge plug was then set in the well above fracture stimulation zone 3 as a follow up program, but water was again present during the subsequent flow testing. Independent evaluation of the production logging test was conclusive that the water was coming from the lower zones of the well through a system of natural fractures existing in the lower reservoir. The operator is continuing to evaluate the best way to remediate this water flow into the well bore. The next phase of the program is to run a static gradient survey to evaluate the effectiveness of the seals on the two isolation bridge plugs set in the well bore. If these isolation bridge plugs have successfully sealed off the water flow in the well bore, then it is likely that the water is channelling behind the casing and entering the well through existing perforations above the two isolation bridge plugs. The results of the static gradient survey will determine the forward program in planning to eliminate the water flow in the well bore. This will include setting an additional retrievable isolation bridge plug above fracture stimulation zone 5. It is likely that there is competent cement bond above fracture stimulation 5 which will prevent behind casing channelling of water into the fracture stimulation zone 6 perforations, which is responsible for 65% of the total gas flow from Warro-3. Another option is to undertake a cement squeeze job to eliminate the behind casing channelling of water. This may involve squeezing multiple sets of perforations so as to better insure that the pathway of the water into the well is eliminated. ~ 2 ~ Untested Gas Production Potential - Zone 7 Independent analysis of the production logging test evaluated fracture stimulation zone 6 as contributing approximately 65% of total gas flow and 75% of gas flow above zone 2. Zone 6 was assessed as having higher permeability than the other frac zones with about 20m of net pay. A water free gas flow rate of 5.6 mmcfpd has now been achieved (albeit temporarily), with zone 6 the likely contributor of 65% to 75% of this flow. The unfracced gas sand zone 7, which sits just above zone 6, contains about 55m of net pay and appears from the log analysis to have similar characteristics to zone 6. This additional unfracced zone provides substantial potential production upside for Warro 3. The Company will update the market following analysis of the static gradient survey and further flow testing after the next isolation bridge plug is set. For and on behalf of the Board
TSV Price at posting:
3.2¢ Sentiment: LT Buy Disclosure: Held
