Tsssss.. and that's not the sound of escaping gas, it's the sound of burning flesh!
My takeaway from this release is that the fracc did indeed propagate too far / in the wrong orientation, and therefore intersected water-bearing structures. Bad luck!
But also, as Transerv make clear in their Commentary section, it is now apparent that they drilled the hole in the wrong place. It was intentionally sited close to a fault-related fracture zone, as they hoped that this would enhance reservoir permeability, but the fault zone has also turned out to be a water-bearing structure (as most fault zones are), and water ingress has compromised the gas flow.
It sounds as though their next well, following further 3D seismic definition, will be sited well away from any faulting. This should reduce the chances of a water problem, but may also have a negative impact on reservoir permeability and the ability of the gas to flow at that location.
They have done a good professional job and learnt a lot from this well, most of which has been positive. But you have to wonder how much it has cost them, and how close we are now to a low-priced capital raising and further dilution of our equity.
Back to the bottom drawer for this one..
TSV Price at posting:
2.4¢ Sentiment: None Disclosure: Held
