Armour Energy Surat Update
The Board of Armour Energy has provided an update on the Surat 2020 Work Programme which is being conducted on Armour's 100% owned and operated Kincora Gas Project. Armour re-established momentum on its 2020 Work Program following delays from the COVID-19 quarantine measures restricting personnel movements from South Australia enacted in late November/early December enabling most of the 2020 Work Program to be completed in December. However, some further delays in completing some activities have been recently experienced due to wet weather restricting access. On 14 Dec 2020, testing equipment was mobilized to the Horseshoe #4 location to commence clean-up operations. With the initial assistance of nitrogen, the well immediately began to recover frac fluids and gas to flare. Continuous flowback operations were interupted by wet weather restricting access. While the well is in the early stages of clean-up, it is currently capable of sustaining flow on its own and as such the Company has elected to connect the well to sales and continue cleaning up and evalutingthe well in-line.
Warroon #1 has been connected to sales and will continue to clean-up and be evaluated in-line. The well is currently producing 400 mscfd and appears to be a strong hydrocarbon liquids rich producer. Flow rates are expected to increase through the in-line clean-up phase. In order to enhance liquids recovery, artificial lifts will be considered after further data is collected. As a final step, the temporarily suspended Showgrounds interval, previously producing at approximately 400 mscfd, will be commingled with the new liquids rich Rewan production.
As a result of wet weather and equipment scheduling impacts, the Horseshoe #2 flowback and clean-up operations have been deferred to January. The Company will continue to provide updates on intial result results, overall programme highlights, and production data 30-days following commencement of sales gas production. All wells in the 2020 Work Programme will produce and flow gas into Armour's Surat Basin Gas Gathering System to the Kincora Gas Processing Plant for additional gas sales.
The Company is overall very encouraged with both the Horseshoe #4 and Warroon #1 Basal Rewan results to date as it establishes the potential of a significant new pay zone with multiple additional candidates that have been previously overlooked by other operators. Identification of bypassed pay zones is possible due to advancements in logging technology allowing for the identification of mineralogically complex sandstones with hydrocarbon saturation suitable for hydraulic stimulation. The encouraging initial results pave the way for a potential material reserves maturation plan to unfold across Armour's Surat acreage from the Rewan formation.
Armour Energy is using both new and existing data Work programme delayed by wet weather to finalize its candidates for a 2021 Work Programme. The Company is planning to execute this new work programme, which will include fracture stimulations activities within its existing wellstock, during the first half of 2021.