shale results disappoint

Back from the Magic Millions picked up a nice couple of fillies, but back to the main story, bullish presentation from RJ yesterday so when the price began to fall topped up again. Halifax -1 will be closely watched and the expectation in the market place now is for the best results of all the wells drilled so far due to the 1300m of gas saturation if the old geologists ( i say that kindly) are wrong then the SP will be in serious trouble purely from a market view.

One thing people seemed to have missed from yesterdays presentation was RJ comment of the feeling that gas could extend right across 218 & 855 in the higher levels above the shale, based on the discovery in Halifax-1 (Gassed has been mentioning this for quite a while now). Its something the JV partners have ignored pursuing in the past, going back as far to ADE when shale was seen as the bigger story. Maybe not so now.

Extract todays SMH

INVESTORS sold off stocks exploring for shale gas in the Cooper Basin on Monday after Beach Energy reported a disappointing flow rate from its Moonta well there.

There are hopes that Australia can replicate the shale gas boom in the US, with the amount of recoverable shale gas in the Cooper Basin estimated at 85 trillion cubic feet by the US Energy Information Administration, but development has so far been slow.

Late on Friday afternoon Beach reported that the Moonta-1 unconventional vertical well had flowed gas at a maximum controlled rate of 2.6 million square feet per day (MMscfd) and was currently flowing at 1.6 MMscfd.
The disappointing rate fell short of expectations of up to 4 MMscfd, according to Macquarie analyst Kirit Hira, based on Beach's two earlier Cooper Basin shale gas wells Encounter and Holdfast.

Beach shares fell by 9 per cent on Friday, or 12.5¢, to $1.33, while partner Icon Energy fell more than 6 per cent to 22¢ and both Drillsearch and Senex Energy fell 4 per cent, to $1.41 and 70¢ respectively.

A spokesman for Beach said there was an ''element of surprise'' at the sell-off, given the company was in the early stages of an exploration program.
The spokesman said Beach was ''on a learning curve'' to identify the sweet spots in the Nappamerri Trough and the drilling at Moonta had confirmed there was shale gas at depth in the Cooper Basin. The next flow rates, from the Halifax well - held 60:40 by Beach and Icon - would be reported in early-to-mid February.

Last year Santos announced the first commercial production of shale gas from the Cooper Basin, at the Moomba-191 well, which is still flowing at 2.5 MMscfd indicating flow rates will halve each year - a better decline rate than the US.

But Wilson HTM analyst John Young said the Beach result was ''reasonable''. ''I don't think this one well result means the whole [Cooper Basin shale play] won't work,'' he said. ''We're only three wells into an 11-well program. The actual flow rate was better than the two prior wells.''