EXR back on site at QLD gas project
Our energy Investment Elixir Energy (ASX: EXR) is back on site at its QLD gas project.
Today, EXR confirmed that staff are back on site and operations are underway ahead of the company’s stimulation/flow testing program.
EXR expects to be flow testing its Daydream-2 well in a few weeks time.
At the moment, EXR’s project already has a 1.297 trillion cubic feet contingent resource.
The purpose of the flow test is to see if EXR’s project can be commercialised.
A positive from a share price perspective is that EXR is going into the flow test having already raised $6.25M at 10c per share.
The raise means that EXR can run the flow test and hopefully deliver results with its existing cash balance - that could mean no dilution between now and a major catalyst.
Ultimately, IF the results are positive then any investors looking for exposure to EXR will have to buy on market.
Interestingly the placement was over-subcribed which is a good sign there is investor interest in having EXR exposure going into the flow test.
We participated in the placement and are looking forward to the next few weeks…
What we know about EXR’s flow test:
(now, before you scroll over without clicking - it’s only a 2 min video, an easy watch that explains the current well and planned stimulation and flow test - you can watch it here)
Earlier in the year EXR flow tested one part of its Daydream-2 well (the Lorelle Sandstone) and produced a stabilised flow rate of ~1.3 million standard cubic feet per day (MMscfd).
The target for the program is to try and hit a combined flow test across all reservoir’s above 2.5 million standard cubic feet per day (MMscfd)
That was the number EXR mentioned would be enough to consider the well commercial…
We think that number is a conservative take on the projects overall potential especially considering EXR is testing only ~19% of the gas bearing zones of the well.
Going into the flow rate our expectations across all reservoirs are as follows:
- Bull case = >5mmcf per day flow rate
- Base case = 2-5mmcf per day flow rate
- Bear case = <2mmcf per day flow rate
What’s Next for EXR?
EXR expects operations to start in two weeks time, the flow test shouldnt be too far away after that.
Below is what the timeline looks like for the Program:
