drilling update

Blue Energy Limited (ASX: BUL) provides the following operational update.
ATP 814P ? Monslatt Block
Blue Energy has engaged Titeline Energy Pty Ltd to conduct under-balanced (air) drilling operations on Blue Energy?s Monslatt 6 and 7 pilot production wells. As previously reported Monslatt 6 and 7 were drilled to the top of the target P seam (Moranbah Coal Measures) and suspended to enable the P seam to be drilled under-balanced. Titeline Rig 2 has commenced under-balanced operations and has drilled out the P seam in the Monslatt 6 well. The operations on the Monslatt 6 well have now established free flowing gas from the P seam. This confirms the fully gas saturated nature of the P seam in this location, verifies the adsorption isotherm results from core analysis in the Monslatt 1A core hole and suggests a fully gas saturated P seam coal across the majority of the block.
Whilst the recorded gas rate is very modest at this early stage (approximately 15,000 standard cubic feet per day), it is very encouraging and demonstrates that gas will freely flow from the coals. The well will now be completed to allow for an extended production test to be conducted, with produced gas and water monitored for rate and quality.
In parallel to this activity, plans are well advanced to drill a ?surface to in-seam? style lateral well in the Monslatt Block. This well will establish the length of horizontal section required for economic flow from the P seam. It will also maximise the potential for fracture intersection and therefore the chance of enhanced gas flow form fracture permeability. Blue Energy is in advanced negotiations to secure a suitable drilling rig and directional drilling team to undertake this well. It is expected that the well will commence in early to mid September this year.
Reserve certifier Netherland, Sewell and Associates (NSAI) have indicated that once an economic flow rate has been established they are likely to be in a position to certify 2P reserves from the current contingent resources within the Monslatt block.
Monslatt 6 Flare