Real Energy seeking enhanced productivity at Tamarama wells

By Trevor Hoey. Published at Sep 18, 2018, in Energy

Cooper Basin focused oil and gas company, Real Energy Corporation Ltd (ASX:RLE) has informed the market that fracture stimulation of the company’s Tamarama-2 and 3 wells, located in ATP 927P, Cooper Basin, Queensland will commence within two weeks.

Real Energy is focusing initially on the Toolachee and Patchawarra formations which are well-known throughout the basin for holding and producing substantial gas resources.

Seismic interpretation in conjunction with existing petroleum well data has determined that the Toolachee and Patchawarra formations are significant across much of the company’s acreage. This has resulted in an independent assessment by DeGolyer and MacNaughton, which estimates a mean-case prospective resource in place of 13,761 bcf.

Of course, RLE remains a speculative stock and investors should seek professional financial advice if considering this stock for their portfolio.

New technology to enhance productivity

Tamarama-2 and Tamarama-3 incorporate new well designs to enable enhanced productivity through better alignment between the hydraulic fracture and the wellbore.

This ‘alignment flow technology’ has resulted from extensive ongoing research at the University of Queensland aimed at improving hydraulic fracturing designs in this area of the Cooper Basin.

Underpinning the new technology is a theory that better alignment with the wellbore, perforations and the hydraulic fracture with the prevailing stress direction, an optimised hydraulic fracture and enhanced flow should be achievable.

Having conducted reservoir modelling to maximise the design of the fracture stimulation, Real Energy’s technical team now expects to conduct a three-stage fracture stimulation in Tamarama-2 and a four-stage fracture stimulation in Tamarama-3 in the Toolachee-Patchawarra formation sections at depths below 2300 metres true vertical depth.

Reservoir modelling points to large resource

The reservoir modelling using the acquired stress and permeability data and enhanced fracturing designs indicate the well’s initial production should exceed 3 million standard cubic feet per day in both Tamarama-2 and Tamarama-3 wells. In dollar terms, and based on current East Coast gas pricing, this equates to potential daily revenue of at least $52,800 if these flow rates are maintained. These wells would be put on production with Tamarama-1 which would add further gas volumes. Highlighting the broader significance of this development, Real Energy’s managing director Scott Brown said, “The fracture stimulation of Tamarama-2 and Tamarama-3 is an important step for Real Energy as we move towards commercialising the Windorah Gas Field.

“We believe we will be able to prove commercial flow rates with these wells which will form the basis for a much broader field development program.”

If Tamarama-2 and Tamarama-3 are a success based on the approach to fracture stimulation that RLE is taking, it is likely that they will use the same completion techniques to commercialise their gas field. .

“Real Energy is very well-placed to take full advantage of the growing demand for Australian east coast gas, and this well stimulation program will build further on the excellent results we have received to date at our 100%-owned ATP927P acreage.”

Real Energy have a lot of near term value catalysts that may improve RLE’s share price, off the back of these successful fracs and flow backs. Real Energy’s acreage has a certified Estimated Total Mean Gas-In-Place of 13.76 TCF and a Maiden 3C gas resource of 672 BCF so the Company has potentially a huge resource to exploit.

Investors appear to have warmed to Real Energy ahead of these developments with its share price increasing approximately 10% in less than a week. However, Tuesday’s closing price of 7.6 cents still represents a sharp discount to K1 Capital’s base case valuation of 21 cents per share and Breakaway Research’s share price target of 32 cents per share.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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