Oil and gas roundup: What’s the battle plan for ASX small caps this year?
A new year brings a new raft of developments from Australia’s small cap oil and gas companies, which have operations not only locally but also in other parts of the world.
It can be a little overwhelming given the sheer number of wells, tie-ins, workovers and other activities that are in the works.
But never fear, Stockhead is here to provide a bit of a leg up by summarising some of the activities that Australian small caps will be engaged in during the early part of 2020.
We start our little round up with some local operations.
Lakes Oil (ASX:LKO) will soon know if and how well its Nangwarry-1 gas exploration well in the onshore Otway Basin, South Australia, will flow gas.
The company completed drilling of the well on December 31, 2019 and last noted that it was running different tools to measure porosity and permeability – both of which are key to how well a well will produce gas.
It will then formulate a strategy for testing and completing the well before carrying out flow testing when the required approvals and equipment are in place.
Lakes has a 50 per cent interest in Nangwarry-1 while Vintage Energy (ASX:VEN) holds the remaining 50 per cent.
Over in the Cooper Basin, Vintage is itself drilling the sidetrack of its Vali-1 well, which has already observed oil shows in the shallower Westbourne and Birkhead Formations along with gas shows in the deeper Nappamerri Group and Patchawarra Formation.
Total depth is expected to be reached early next week after which wireline logs will be acquired.
Meanwhile, Strike Energy (ASX:STX) – better known for its West Erregulla-2 well in the Perth Basin – is continuing the drawdown of water at its Jaws-1 deep coal seam gas well.
In mid-November, the company noted that bottom hole pressures at Jaws-1 were nearing the potential production inflection point and that it expected to reach the drawdown target pressure in December.
With December now over, it seems likely that a further update on Jaws-1 could be just around the corner.
In Queensland’s Galilee Basin, Comet Ridge (ASX:COI) has mobilised a specialised coiled tubing unit to carry out fracture stimulation of the Albany-1 ST1 well.
Flowback of the stimulation fluid from the Albany-2 well is also underway with more than a third of the fluid recovered to date and gas detected in the flow back stream.
State Gas (ASX:GAS) expects to bring the Serocold-1 well at its Reid’s Dome gas project in central Queensland into production testing soon.
This is expected to mirror the earlier Nyanda-4 well, where production increased steadily during December to about 436,000 cubic feet per day.
A significant number of small cap ASX oil and gas companies have operations in North America.
Winchester Energy (ASX:WEL) has a full dance card with its latest Mustang oil field well in Texas, White Hat 20#4 currently recovering frac fluid and oil, with the oil cut expected to increase as more frac fluid is recovered.
The company will also complete the White Hat 39#2 well as an oil producer after intersecting 30 feet of gross pay with excellent oil and gas shows.
At the Lightning prospect, the company is producing oil from the Arledge 16#2 well with plans to perforate a further 24.5 feet section above the current Lower Cisco producing intervals.
Additionally, Winchester is also drilling the McLeod 17#3 step-out well at the Lightning prospect.
Meanwhile, Sacgasco (ASX:SGC) is gearing up to spud the Borba 1-7 well in California after receiving a drilling permit from the California Division of Oil, Gas and Geothermal Resources.
Borba is expected to have high pressures in the target reservoirs, which should result in high gas flow rates.
Drilling of Borba 1-7 is expected to start in late January or early February.
Byron Energy (ASX:BYE) could spud the SM71 F4 well offshore Louisiana in late January. This well will extend the D5 Sand reservoir and add new reserves to the field if successful.
The current three wells at the SM71 F platform have produced a total of 1.97 million barrels of oil and 2.8 billion cubic feet (Bcf) of gas since production started in March 2018. Most of this — 1.9MMbbl of oil and 2.7Bcf of gas — were sourced from the D5 sand.
Otto Energy (ASX:OEL) is also poised to increase production with operator Hilcorp Energy completing the Green #2ST well at the Lightning gas and condensate field in Texas for production.
Green #2ST intersected 146 feet of pay over seven different sand intervals. There is potential to add up to 175 feet of additional pay depending upon porosity and water saturation cutoffs.