TIDMBCE
RNS Number : 7188W
Beacon Energy PLC
14 December 2023
14 December 2023
Beacon Energy plc
("Beacon Energy" or the "Company")
Erfelden Production Update
Beacon Energy (AIM:BCE), the full-cycle oil and gas company with
a portfolio of onshore German assets through its wholly-owned
subsidiary, Rhein Petroleum GmbH ("Rhein Petroleum"), announces a
production update on the Erfelden field following the installation
of a rod pump on the Schwarzbach-2(2.) ("SCHB-2(2.)") well.
SUMMARY
-- The rod pump has now been installed on the SCHB 2(2.) well
and, having produced at much higher rates initially, production has
now stabilised at a rate of approximately 40 barrels of oil per day
("bopd").
-- The low production rate indicates that the reservoir near the
wellbore has been invaded with drilling fluids which are
restricting flow rates. This is not uncommon in situations where
hole stability issues have occurred during drilling due to the use
of high-density drilling fluids to stabilise the hole.
-- The well continues to clean-up, albeit currently at a slow
rate. Even at these low flow rates, production is commercial with
field revenues exceeding field operating costs.
-- The Company will undertake industry-standard well stimulation
in the fourth week of January 2024, which is expected to improve
production.
-- The Company is fully funded to undertake the planned well
stimulation in an operation that will take approximately 1 week and
which has an estimated cost of less than EUR500,000.
-- To date, over 1,600 barrels of oil have been produced through
the Schwarzbach facility since the installation of the rod
pump.
-- A planned pressure build-up test is currently underway using
a downhole pressure memory gauge that will be recovered prior to
the well stimulation operation. The data from this test will inform
our understanding of both formation pressure in the oil-bearing
reservoir and the "skin" effect, caused by fluid invasion around
the wellbore during drilling, and which is impeding flow.
-- As previously announced, as a result of the SCHB 2(2.) well,
the Company has recently increased its Best Estimate of recoverable
reserves on the Erfelden field from 3.8 million barrels to 7.2
million barrels.
-- The Company continues to estimate that given the excellent
reservoir properties and the light oil recovered, and in the
absence of an invasion zone which restricts flowrate, the SCHB
2(2.) well could achieve production in the region of 900 bopd.
-- At those flow rates, the Company would expect to deliver
operating cash flows in the order of US$1.5 million per month
(assuming $80/bbl Brent).
Company production, including the contribution from the
Company's interest in the Lauben field, is approximately 70 bopd
which makes a material contribution towards operating costs and
G&A.
The Company expects to provide further updates on the clean-up
operations, the well stimulation, and the installation of the ESP
as appropriate.
Beacon Energy Chief Executive Officer, Larry Bottomley commented
:
"After an extended flow test to allow the well to clean-up and
provide us with the critical data to inform next steps, the
SCHB-2(2.) well is now in commercial production but at lower
flowrates than expected given the quality and thickness of
oil-bearing reservoir encountered in the well. It is not uncommon
for wells to take extended periods of time to clean up and we
remain confident that the well will produce at higher rates either
through natural clean-up during production or once we execute the
remedial works.
"The SCHB2(2.) well encountered excellent oil-bearing reservoirs
with thickness and properties in excess of pre-drill prognosis, but
operational challenges encountered while drilling has left a legacy
of drilling fluids that have invaded the reservoir near the well
bore. These fluids are currently impeding production. From our
analysis, this invaded zone is likely to be less than 3 metres
around the wellbore which we intend to tackle with industry
standard well stimulation techniques.
"The principal implication for the lower than expected flowrate
is the delay to the development of the Erfelden field. The
SCHB-2(2.) well has demonstrated a material reserve in the Erfelden
field, ranging from 4.7 - 7.2 - 10.2 million barrels in the Low,
Best Estimate and High case respectively in the Company's
assessment. We see a significant positive valuation in the region
of $140 million NPV(10) in the Best Estimate Case (management
estimate, assuming $80/bbl Brent) which justifies our continued
efforts to realise the value of this asset.
"As previously announced, based on standard oil-industry
analysis the Company estimate that given the excellent reservoir
properties and the light oil recovered, and in the absence of an
invasion zone which restricts flowrate, the SCHB 2(2.) well could
achieve production in the region of 900 bopd. The challenges
currently being experienced do not alter our belief in the ultimate
production potential from this well. At those flow rates, the
Company would expect to deliver operating cash flows in the order
of US$1.5 million per month (assuming $80/bbl Brent).
"We remain fully focused on establishing optimal production from
the SCHB-2(2.) well as quickly as possible through the rod pump,
undertaking well stimulation and ultimately the installation of the
ESP.
"We look forward to providing an update on the work-over
programme in due course."
END
Enquiries:
Beacon Energy plc
L arry Bottomley (CEO) / Stewart MacDonald (CFO) +44 (0)20 7466 5000
Strand Hanson Limited (Financial and Nominated Adviser)
Rory Murphy / James Bellman +44 (0)20 7409 3494
Buchanan (Public Relations)
Ben Romney / Barry Archer / George Pope +44 (0)20 7466 5000
Tennyson Securities Limited (Broker)
Peter Krens / Ed Haig-Thomas +44 (0)20 7186 9030
For further information, please visit www.beaconenergyplc.com and @BeaconEnergyPlc on Twitter
To register for Beacon Energy's email alerts, please complete
the following form:
https://www.beaconenergyplc.com/media-centre/news/#alerts
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
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END
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December 14, 2023 02:00 ET (07:00 GMT)
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