Armour Energy Flows Gas at Egilabria 2 Well in ATP1087 in Queensland


Armour Energy Ltd reported Monday that the Egilabria 2 well in ATP1087 in Queensland, Australia has started to continuously flow gas through the test separator during the flowback recovery process. Continuous flow is being observed with intermittent flaring. However, Armour has not yet measured the flow rate. The Company expects to begin flowing annulus gas through the separator in order to measure a stabilized flowrate by the end of the coming week, which is then expected to further increase as more stimulation fluids are recovered.

The Egilabria 2 well is located in ATP1087 in North‐West Queensland, 186 miles (300 kilometers) north of Mt Isa and is 100 percent owned and operated by Armour.

The well is currently flowing back a mixture of stimulation fluids and gas via a downhole PCP pump through the tubing. The annulus is accessible for pressure and fluid level measurements but has been shut in. The annulus pressure at surface has increased to 630 psi over a 7 day period whilst the Company is pumping fluid through the tubing. The pressure in the annulus is building at rate of 4-7 psi per hour.

The start of continuous gas flow followed 8 days of fluid pumping of up to 122 barrels per day. To date 57 percent of the original 11,400 barrels stimulation fluids that were originally pumped into the well have been flowed back. This is an increase of 12 percent since the flowback was recommenced earlier this month. Flowback fluid samples have been taken and are currently being analyzed.

The Lawn Shale is present in Egilabria 2 between depths of 5,193 and 5,643 feet (1,583 and 1,720 meters), at 449 feet (137 meters) thick, and hosts up to 8 percent Total Organic Content (TOC). During the drilling of the well, significant gas shows and flares were encountered between 1,394 and 6,135 feet (425 and 1,870 metets) vertical depth. Analysis of the hydraulic stimulation undertaken in the lateral well, drilled from 4,265 feet (1,300 meters) depth during 2013, shows that a single zone accepted the highest volumes of larger sized proppant (used to create and hold open a conductive hydraulic fracture). It is therefore expected that the majority of the returning fluid and gas flow will be coming from this single zone.

Armour’s drilling activities in 2013 included the drilling of the Egilabria 4 well, approximately 4.6 miles (7.5 kilometers) to the north which also tested both the Lawn and the deeper, larger Riversleigh Shale Formation 820 feet (250 meters) thick. TOC contents in the Riversleigh shale were up to 11 percent. Gas shows were registered against both the Lawn and Riversleigh Shales in Egilabria 4.

The flow test results to date from Egiliabria 2 are considered to be very encouraging and substantiate the potential for economic gas flows from successfully stimulated gas wells in the Lawn Shale in the forthcoming programs. The Company will continue to provide further updates as the testing program continues.




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