Next Investors logo grey

Sacgasco hits four zones of interpreted gas saturated sandstones


Published 21-AUG-2017 14:33 P.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Sacgasco (ASX:SGC), an Australian based energy company focused on the exploration and production of conventional gas in the Sacramento Basin, onshore California has returned extremely promising results from the appraisal of wireline and mud logs from its Dempsey 1-15 Well.

The wireline and mud logs confirmed four zones of interpreted gas saturated sandstones at field production levels (depths from approximately 1,000 metres (3,300 feet) to 1,560 metres (5,100 feet). Based on log correlations and 3D seismic these gas filled sands have not been previously produced in this fault block of the field.

SGC estimates point to net gas pay ranging from 30 to 50 feet depending on petrophysical-parameter cut-off values used. However, as a guide the database on the Californian Regulator’s (DOGGR) website shows that SGC’s and other offset production wells have produced natural gas volumes that have exceeded 1 billion cubic feet of pipeline quality natural gas from individual equivalent zones.

On this basis, management appears well justified in making the comment that there is sufficient producible gas in the discovered zone at field production levels to provide cash flow to more than pay for the well.

Of further encouragement is that the result is consistent with the group’s pre-drilling prognosis, perhaps indicating that its expectations as it moves to the full depth of 3200 metres will be met.

Of course this is speculative at this stage and investors should seek professional financial advice if considering this stock for their portfolio.

First of five targets and proximity to meter station provides quick commercialisation

While SGC’s Managing Director, Gary Jeffery was buoyed by the results, he also highlighted that this is only the first phase of the drilling of Dempsey 1-15, and pointed out that the focus now turns to drilling the more than five underlying targets.

The fact that the SGC meter station connection to natural gas markets is adjacent to the Dempsey Well means that the company can quickly move to commercialisation.

Sacramento basin gas

Importantly, SGC is already a producer, and the development of another producing asset is likely to be viewed favourably by investors who have warmed to the stock because of its more stable position as a cash flow generator rather than just an exploration play.

Management will be releasing further wireline logging results once the total drilling depth of 3200 metres is reached, a milestone that could be a significant share price catalyst should the news be as promising as today’s.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (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 and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.