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Bass Oil Limited (ASX:BAS), an Australian energy explorer, has made significant strides with its latest Extended Production Test (EPT) at the Kiwi-1 well. The company reported impressive flow rates, which not only exceeded internal projections but also sparked a sharp rally in its share price. The Kiwi-1 well, located in the Cooper Basin, produced 4.1 million cubic feet per day (MMcfpd) of gas and 988 barrels of condensate, marking a pivotal moment for Bass Oil and its shareholders.
Key Highlights from the EPT
The Extended Production Test at Kiwi-1 has revealed promising results that have captured the market’s attention. The test produced a robust flow rate of 4.1 MMcfpd, alongside 988 barrels of condensate. This performance aligns with the expectations of Bass Oil’s geotechnical team, who had anticipated significant output based on earlier data.
Moreover, the quality of the gas is noteworthy. Preliminary assessments indicate that the gas has low impurity levels, with carbon dioxide content below 4.5%. This is crucial for maintaining the commercial viability of the gas, as lower impurity levels reduce processing costs and enhance the overall value of the resource. Laboratory tests are expected to confirm these initial findings, solidifying the gas quality.
Economic Impact of Condensate Production
While the gas flow rates have met expectations, the production of condensate has exceeded them, potentially enhancing the economic viability of the Kiwi-1 discovery. The condensate-to-gas ratio (CGR) is reported to be over 200 barrels of condensate for every 1 MMcfpd of gas produced. This is a significant metric, as condensate, a high-value hydrocarbon liquid, can substantially boost the revenue potential of the project.
Bass Oil noted that the high condensate production could significantly increase the economic value of the Kiwi discovery. The company is closely monitoring this aspect of production, as it represents a lucrative opportunity in addition to the gas output.
Challenges and Ongoing Analysis
Despite the positive results, the company has faced some operational challenges. The high volume of condensate has presented handling and storage limitations, which have, in turn, restricted the ability to achieve even higher gas flow rates from the well. These constraints are currently being addressed as part of the ongoing EPT.
The test will continue until sufficient data is gathered to accurately assess the size of the reservoir. Following this, the well will be shut in for pressure build-up, a standard procedure that will provide further insights into the reservoir's potential. This data will be instrumental in estimating the resource size and planning future development.
Market Reaction and Share Price Surge
The market has reacted positively to the news from Kiwi-1. In the first half hour of trading following the announcement, Bass Oil shares soared by 40% to 10.5 cents per share. This sharp increase was sufficient to erase the company’s year-over-year losses, which had been over 30% prior to the announcement. By mid-morning, the year-over-year losses had narrowed to just 4.5%, reflecting renewed investor confidence in Bass Oil’s prospects.
Bottomline
The successful flow rates from the Kiwi-1 well mark a significant milestone for Bass Oil. The combination of robust gas production, high-value condensate, and low impurity levels has not only exceeded the company’s expectations but also revitalized investor sentiment. As the EPT continues and more data becomes available, Bass Oil is well-positioned to capitalize on the economic potential of the Kiwi discovery. The market’s enthusiastic response underscores the importance of this achievement, setting the stage for further developments in the company’s exploration efforts.
