Emerging oil and gas exploration and production company, Eon NRG Limited (ASX: E2E) recently came up with an update on the completion of its first well in the PRB region - the Govt Kaehne #9-29 well, of which it is the operator (61% working interest).
A significant development has been made by the company since the last update provided in December 2019, notifying its anticipation for the first oil delivery in January 2020.
What all happened since last update
- In order to complete the well, the company ran and cemented 5½” production casing;
- The completion rig was mobilised to site on December 18th and cement bond logs were run to evaluate the integrity of the cement behind the production casing;
- The Dakota Formation was perforated with 4 shot’s per foot across three intervals between 6,322 and 6,345 feet;
- After the initial swab tests showed limited inflow, the perforated zones were acid stimulated with Hydrochloric acid and surfactant to remove any near wellbore damage created by cement or mud invasion.
Results of Dakota Formation
When the well was planned, the company had expected the Dakota Formation pay to be in the range of 6,279-6,328 feet. However, as per the post drilling geological review, the top of the Dakota Formation was around 10’ lesser than what was expected, and the actual pay was encountered 26’ lower than was projected.
Logs showing perforation depths in the Dakota Formation (Source: Company Reports)
Further, Swab testing of the Dakota Formation is indicating a low permeability reservoir due to interbedded silts and sands, limiting the inflow of fluids. As per the mud logs and open hole log analysis, there are high chances of presence of hydrocarbons in the Dakota Formation.
The completion of the shallower Muddy Formation, which is currently looking more attractive than the Dakota as it produces water free or very low water production, is being considered now. Permitting of the Muddy Formation completion is ongoing and will be implemented once the regulatory agencies approve the completion procedure.
How is Eon placed amidst Oil Outlook?
Oil prices witnessed significant uptick amidst global geo-political tensions, with a further impetus provided by escalating US Iran tension.
Considering the recent developments made by Eon in relation to the development of first PRB well and its continuous operations at other fields, it can be said that Eon is well placed to gain from positive oil outlook scenario.
Eon is now focused on completing the more attractive shallower Muddy formation while it continues to operate its other four fields which produces over 300 barrels of oil per day and generates cash flow to support ongoing field costs and service the existing bank loan interest.
E2E traded at $0.004 on 10 January 2020 with a market capitalisation of $3.08 million.
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