drilling close by

ASX: NGY) shares are on the rise after it spudded the highly anticipated second pilot well with partner Pertamina at their Muara Enim Production Sharing Contract (PSC) Pilot Production Site in South Sumatra, Indonesia.

This will add to the confidence provided by the first well, located about 500 metres away, that has been producing gas for over 120 days as it progresses towards pilot production with gas sales to compressed natural gas producer Dharma Pratama Sejati.

Dharma Pratama Sejati has agreed to offtake between 1 million and 5 million standard cubic feet of gas at a price of US$10 per million British Thermal Units.

This represents potential gross revenue of between US$10,000 and US$50,000 per day, or between US$3.6 million to US$18.2 million per annum to the joint venture. NuEnergy has a 40% interest.

In addition, NuEnergy and its partner, Indonesian national oil company Pertamina, are already on track to convert the pilot production site to a production and sales facility.

Discussions are also underway with upstream oil and gas regulator SKKMIGAS for pre-Plan of Development (pre-POD) approval for the pilot plant so NuEnergy may sell gas from the pilot into a gas gathering system located about 7 kilometres from the site.

Drilling

NuEnergy will again use radial jet technology to complete extended laterals across the most significant of the upper coal seams, and use pre-perforated slotted linear casing over the lower coal seams to maximise access to the productivity of those seams.

It will log, permeability test and radial jet over 31 metres of Mangus and Suban coal seams, with the laterals extending outwards to between 30 and 50 metres from the well casing.

Muara Enim has Contingent Gas Resources of 98 billion cubic feet though the company expects to be able to book first reserves later this year.