baillieu update

"News: With activity in the Mississippi supported by the deployment of a second rig, RFE continues to update the market on its progress.

Blair 1-24: Impressive – the third full day of production testing at the Blair 1-24H well saw production rates significantly increase to 331 barrels of oil equivalent (BOE). On a volumetric basis, of the 331boe produced, the production cut was 253 barrels and 470,000 cubic feet of gas. RFE will post the 30-day peak and average rate for Blair once production testing is completed.

Implication: Of key importance is this flow rate from Blair looks better than our analog modelled – a good indicative sign for the productivity of the pod and the Noble acreage. Blair has so far seen a higher flow rate (despite a major portion of the load water still sitting in the well bore), and has also delivered a higher oil cut (oil-to-gas ~76%) which we expect will only increase once steady hydrocarbon production is achieved.

McMurtry 1-21: Reservoir stimulation operations have now finished, with 13 stages being successfully completed over the full length of the lateral. The well is now flowing back load water at a rate of approximately 2,000 barrels per day. RFE is now drilling out the plugs at each stage ahead of production testing.

McMurtry 1-22: Awaiting completion.

Bunch 1-19: Currently drilling ahead into the lateral (~6,300 feet). RFE has encountered extensive shows of oil and gas across the lateral, RFE also reported excellent shows of free live oil and gas evident in several areas along the lateral.

Tasman 1-15: Drilling ahead into the lateral (~7,200 feet). Like Bunch, this has also seen extensive oil and gas shows across the lateral and has also delivered excellent shows with free live oil and gas evident.

Outlook: RFE continues to post a steady flow of production data which will increase in the next half as the company deploys a third rig in the September quarter.  

Rating: These results are consistent with our view that we have been conservative in our modelling of RFE’s Big River project. We maintain a Buy rating on RFE, and a A$1.58 per share price target."