Financial Report for the Half Year ended 31 December 2020
Strong rates were achieved during all flow periods and quick pressure build-ups were observed during all shut-in periods, with pressure levels quickly approaching around 3,000 psi. All flow rates were restricted through varying choke sizes to ensure proppant was not returned from the formation into the well bore, therefore avoiding any reduction in the effectiveness of the stimulation process.
During the flow testing of the well, the following activities were undertaken:
- Production Logging Tool run, which determined that gas was being contributed by each of the stimulated zones
- Shut-ins, which observed the pressure response of the reservoir, with pressure readings reaching 2,932 psi at the end of the recording period and continuing to build
- Flow testing, with transient tests undertaken under various choke sizes of 24/64", 32/64" and 40/64" over three equal periods of six hours
- Gas samples taken, with the composition in line with typical Cooper Basin Patchawarra wells
A development concept for the Vali Field has been completed and estimates a field life of around 20 years, with up to nine fracture stimulated vertical wells to target production from reservoirs in the Patchawarra Formation and the Tirrawarra Sandstone.
A type of well production profile has been developed based on the flow test at Vali-1 ST1, and with reference to the decline characteristics of nearby fields. The current base case development concept for the Vali Field is for initial raw gas production of approximately 5 MMscfd (gross) per well for total production of around 5 Bcf per well (on an average well outcome basis). Surface facilities at Vali will be kept to a minimum through the construction of a main manifold that will gather gas from producing wells and deliver it into existing pipelines, with a separator and metering system to also be installed.
Some of the development concept work has been carried out by GPA Engineering ("GPA"). GPA has consulted with Santos, as operator of the SACB JV infrastructure, and confirmed the preferred connection point for a Vali Field pipeline is the Santos operated Beckler Field. Gas will then be transported through the existing pipeline system for processing at Moomba once infrastructure access and gas sales agreements are executed. It is envisaged that connection from Vali would be via multiple composite pipelines, the number and size of which will be defined in the detailed engineering phase of work.
The capital cost associated with the pipeline connection is based on Front End Engineering Design ("FEED") work carried out by GPA. FEED for Vali-1 ST1 connection to the Beckler Field (which is connected to the Dullingari facilities and ultimately Moomba) was completed by GPA. The main objective of FEED was to complete the necessary engineering to identify long lead items and refine the cost estimate for a final investment decision, which will then initiate the procurement stage. Operating costs are expected to be low, with the facilities to be as simple and intervention free as possible.
To maximise value from the Vali gas field, through increased production and resultant cash flow, further wells are planned. To this end, potential locations for further drilling in the field have been identified, with an amended FY21 budget including Vali-2 and long lead items for Vali-3 now approved by the joint venture.
Completion of the Vali-1 ST1 well is necessary ahead of connecting the well into the Moomba gathering system. Production tubing was run into the Vali-1 ST1 hole with isolation packers successfully set on two occasions, however, pressure testing via the production tubing in the well bore indicated a leaking seal assembly on the completion. A black viscous substance was noted as a film on the first packer assembly after its retrieval from the borehole. The substance may be precipitating on the casing and causing the packer leaks under pressure testing. Samples have now been sent for analysis to determine chemical composition and a plan will be developed to remove the material on returning to site to finalise the completion. Although frustrating, deferral of the completion is not critical to the timeline for first production.
Cultural heritage and environmental surveys were recently completed in ATP 2021 for the surface facility, flowline and possible future well locations. The process was completed in a timely manner with the Wongkumara People, Erias and GPA/FYFE and we appreciate and thank all parties for their effort to complete this work in a timely manner.
First reserves for the Vali Field were certified by ERC Equipoise Pte Ltd ("ERCE"), which completed a rigorous and independent review of the Vali gas discovery and subsequent flow results. The Vali-1 ST1 well discovered stacked gas pay in the Nappamerri, Toolachee, Patchawarra and Tirrawarra Formations, however, the scope of the ERCE reserves certification was for the Patchawarra Formation reservoir only. The reserves booking is the first for Vintage and supports commercialisation of the Vali gas field with its planned connection into the Moomba gathering system.
In its report, ERCE estimated gross 1P reserves for the Patchawarra Formation of 12.3 billion standard cubic feet ("Bcf"), 2P of 30.3 Bcf and 3P of 78.9 Bcf which equates to 1P of 13.4 petajoules ("PJ"), 2P of 33.2 PJ and 3P of 86.6 PJ.
Vintage is hopeful that gas produced from the Vali Field will be much greater than the 2P figure estimated by ERCE, with upside to potentially come from stacked reservoirs, including the shallower Nappamerri Group and Toolachee Formation. Vintage has brought this project from farm-in, to discovery, to successful testing and now to reserves booking in just over one year, which is an outstanding achievement for a company at such an early stage since listing.
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About Vintage Energy Ltd
Vintage Energy Ltd (ASX:VEN) has been established to acquire, explore and develop energy assets principally within, but not limited to, Australia, to take advantage of a generally favourable energy pricing outlook.
Vintage Energy Ltd