Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Real Energy Estimates 3C Gas Resource For Cooper-Eromanga Basin Wells

Real Energy Corporation (ASX:RLE) is making strides towards its objective of developing a World Class Tier 1 gas project, estimating a contingent resource for its Tamarama-1 and Queenscliff-1 wells in the Queensland Cooper-Eromanga Basin.

Results received to date from Tamarama-1 and Queenscliff-1 are potentially exciting, which appears to confirm the hypothesis on the presence of the Basin Centred Gas in this area.

The proven, probable and possible (3C) resource of 1 trillion cubic feet of gas is higher than the pre drill assessment of 300 billion cubic feet of gas.

This is due to the fact the log-interpreted net and gross sandstone reservoir pay thickness, average effective porosity and gas saturation are significantly higher than pre drilled estimates.

It is most likely the resource estimate for the whole permit ATP927P will significantly increase as well.

Queenscliff-1 had intersected 67 metres of net gas pay in the Toolachee and Patchawarra formations as well as 10 metres of net gas pay in the Nappamerri Formation. Tamarama-1 intersected 87 metres of net gas pay.

Both wells have been cased and suspended for future testing in the first half of 2015.

"While it is early days we have made some very important steps on the way to achieving Real Energy's medium term objective of developing a world class tier 1 gas project," managing director Scott Brown said.

"To have a 3C contingent resource estimate at this stage in excess of 1Tcf is fantastic for our company."

Well Results

Electric logs and preliminary wireline log interpretation of the recent Queenscliff-1 have indicated the presence of gas saturated Permian Toolachee and Patchawarra formations section at the well.

The petrophysical evaluation, using standard 5% porosity cut-off for pay calculation of the basin centred gas play, indicates the well has encountered 32.5 metres of net sandstone gas pay (from gross 66.5 metres) in the Toolachee Formation and 34.8 metres of net sandstone gas pay (from gross 87.5 metres) in the Patchawarra Formation.

In addition, the well also encountered 10 metres of net sandstone gas pay (from gross 30 metres) in the Triassic Paning Member of the Nappamerri Formation.

Queenscliff-1 is located approximately 668 metres downdip from Tamarama-1 and outside any seismically mapped structural closure.

Tamarama-1 intersected 87 metres of net gas pay.

Together, the two wells have demonstrated the presence of basin centred gas at the company's acreage, which has been independently estimated to host 10.2 trillion cubic feet of in-place gas in the independently estimated to host 10.2 trillion cubic feet of in-place gas.

Basin-Centred Gas

Basin-centred gas plays consist of gas trapped outside the limits of conventional structural traps, potentially forming an extensive accumulation in the deeper parts of the basin.

The reservoir sandstones holding this gas are typically of lower reservoir quality, referred to as tight gas sands.

While conventional evaluation of tight gas intervals intersected in wells previously drilled in and adjacent to ATP 917P and ATP 927P had resulted in these wells being considered non-commercial, recent advances in the development of tight gas reservoirs have led to commercialisation of these resources.

The Toolachee and Patchawarra formations have been independently estimated to host 10.2 trillion cubic feet of gas.

Highlighting its potential, Beach Energy has attracted supermajor Chevron (NYSE:CVX) to jointly explore and potentially develop both basin-centred and shale gas in the Nappamerri Trough of the Cooper Basin, South Australia.

Santos and its partners in the SACBJV have also gotten into the act with drilling to assess the Toolachee Formation.

ATP 927P

ATP 927P comprises four separate blocks with a total area of approximately 1,718 square kilometres that are located 100 kilometres northwest of Eromanga in southwest Queensland.

While no wells were drilled until Real Energy's Tamarama-1 well, the permit is located close to a number of oil and gas fields and discoveries.

The existing seismic grid includes 435 kilometres of multi-vintage 2D regional seismic data.

The target Toolachee and Patchawarra Formations are present across the entirety of the permit.

This is reflected in elevated gas readings that are reported from wells in the area that were drilled as off-sets on local palaeo-highs, and reported elevated gas readings over the entire interval.

Besides the potential for basin-centred gas, ATP 927P also has shale oil and gas potential in the Toolebuc Shale as well as conventional oil and gas targets.

Analysis

The estimation of a 3C contingent resource for the Tamarama-1 and Queenscliff-1 wells is a milestone step for Real Energy's objective of developing a world class tier 1 gas project.

Results received to date from Tamarama-1 and Queenscliff-1 are potentially exciting, which would seem to confirm the hypothesis on the presence of the Basin Centred Gas in this area.

Real Energy has been a success story for investors, with the share price sitting around the $0.32 level - providing a very tidy 60% capital gain in 2014 for shareholders.

There is further newsflow ahead that could further re-rate the company's shares.

These include:

- Production testing of Tamarama-1 and Queenscliff-1 wells;
- Estimating a resource for ATP 927P;
- The decision to carry out further drilling including the West Flynnes-1 well; and
- Results from the addition drilling.

Real Energy Corporation will be presenting at Proactive Investors' 'Investor Luncheon' on 12 November in Sydney. Seats are limited, register here to confirm your place: Sydney.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.