Icon Energy shares climb after surprising gas flows
Nick Nichols, business editor
June 20th, 2009
SHARES in Icon Energy surged yesterday after surprisingly early gas flows were recorded from its latest drilling program in southern Queensland.
The Gold Coast company's stock climbed more than 16 per cent, or 5c, to 35.5c as its progress towards becoming a coal-seam gas producer took a giant leap.
Managing director Ray James yesterday said that there was a sense of euphoria at the company's Robina headquarters, with gas flows uncommon at this stage of the dewatering process.
"It's significant in that we have proven gas to the surface," he said.
"We didn't think we could get that for many months.
"It's not commercial and it's not alight yet, but it's great news that all four wells flowed gas and they have good pressure on the well heads.
"Everything we've done so far and predicted is vindicated by this gas flow. Our confidence level is very high."
Icon has drilled four wells at its ATP 626 field, located south of Goondiwindi in the Surat Basin.
The drilling program is aimed at measuring commercial reserves of gas, a great deal of which will be bought by the Stanwell Corporation which has farmed into the project for $36 million.
Mr James said that with gas delivered on 'day one' of the dewatering process, it was more likely the company could prove its reserves 'pretty quickly'.
In some cases, it can take months for gas flow rates to rise to meaningful pressure.
"The immediate gas flows are an unexpected and significant finding from these tests," said Mr James.
Icon is now planning to drill a further 20 wells in the next 12 months as part of the Stanwell funding arrangement which will earn the State Government-owned power station operator a 50 per cent interest in the Lydia pilot area.
Icon has an estimated in-ground resource of up to 5400 petajoules, or 5.4 trillion cubic feet, within ATP 626.
The latest gas flows have come hand in hand with a cashflow for the company.
Icon has just secured up to $13.8 million in funding through a share placement and could top up its coffers by a further $30 million from existing shareholders under a separate raising.
ICN Price at posting:
35.5¢ Sentiment: Buy Disclosure: Held
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