EXR to kick off Daydream-2 flow test in two weeks
Our energy Investment Elixir Energy (ASX: EXR) is set to kick off its Daydream-2 flow test in QLD in two weeks time.
EXR will be picking up where it left off a few months ago, flow testing its Grandis project in QLD.
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.
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).
That result was BEFORE any stimulation of that section of the well.
In roughly two weeks time EXR will be going back in and flow testing that section again, this time post a stimulation program which happened a few months ago.
After this, EXR will go in and flow test another three sandstone sections & two coal zones.
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
How today’s news impacts our EXR Investment Memo:
East coast gas exposure in Australia
EXR is gearing up to drill its QLD gas project where it has a 395 Bcf contingent resource (which sits inside an initial 3.3 Tcf unrisked mean prospective resource).
The project is right next to existing infrastructure, and acreage held by Shell and Santos. EXR plans to drill the well this year, providing a near term catalyst.
Source: “Why we Invested” section - EXR Investment Memo 29 March 2023
We think EXR’s flow test is perfectly timed with the recent release of the Future Gas Strategy by the Australian government.
The strategy is a change in political sentiment for gas projects, especially across the East coast of Australia where EXR’s project is.
We think a good result could get more mainstream/corporate interest IF EXR delivers a high unexpected 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:
