Australia: Armour Energy Starts Drilling Campaign in Northern Territory

Armour Energy announced that the 2013 Northern Territory drilling campaign has commenced with spudding of the Myrtle Basin 1 well on 13 September 2013 in the company’s 100% owned EP176.

The well is currently at 152m depth after drilling with an air hammer achieved penetration rates of between 30 and 40 meters per hour. In the next 24 hours, Armour Energy will run casing, cement in place and recommence drilling.

The 2‐3 well exploration program is as follows:

1. Myrtle Basin 1;
2. Lamont Pass 3; and
3. Optional: Caranbirini 1

The Northern Territory campaign has been designed to further evaluate:

1. Conventional gas accumulations within the Coxco Dolomite to potentially convert up to 264 BCF of Mean Prospective Resources to Contingent Resources from 23 identified prospects; and
2. The unconventional potential of the Barney Creek Shale Formation.

Coxco Dolomite Unconventional Prospects

In April 2013, Armour Energy announced unrisked Mean Prospective Resources of 264.4 BCF relating to twenty‐three targeted areas in the Coxco Dolomite of the Teena Formation, a conventional, free‐ flowing reservoir in the Batten Trough, McArthur Basin. This type of conventional gas accumulation was discovered by Armourin the course of drilling the Glyde 1 ST1 lateral well in August 2012 (which flowed 3.3 mcfd) and occurs within the porous and permeable dolomites and breccias of the CoxcoDolomite.

Barney Creek Shale Formation

As with the Cow Lagoon 1, Glyde 1 and Glyde 1 ST1 wells, Armour continues to gather extensive data to further substantiate the unconventional resource potential of the Barney Creek Shale Formation. Several studies are underway that will aid further targeting of a future lateral well with hydraulic stimulation in the Barney Creek Shale Formation.

The gas discovery at the Glyde 1 vertical well drilled in August 2012 substantiated MBA Petroleum Consultants’ estimate of Mean Prospective Resources of 18.6 TCF in the Barney Creek Shale within EP 171 and EP 176.

Myrtle Basin 1 Vertical Well

The Myrtle Basin 1 vertical well will be drilled to a planned depth of 800m and is located approximately 17 km south‐west of the McArthur River Mine and approximately 5km southeast of the McArthur River Pipeline. The Myrtle Basin 1 location is designed to evaluate shallow hydrocarbon accumulations in the Barney Creek Shale and Coxco Dolomite that are similar in depth to the Glyde 1 & Glyde 1 ST1 (600 meters) gas discovery locations. Shallow mineral holes in the area have reported oil bleeding from core and gas to the surface.

Armour Energy has recently identified two structures in the basin, and a number of well locations have been proposed based on the January 2013 gravity survey and third party hydrocarbon studies (see Figure 2). Myrtle Basin 1 will be testing a positive structure that has an in‐house prospective technically recoverable resource of 4.4 BCF. A similar structure immediately south has also been mapped and contains up to 6.8 BCF of prospective resource.

Armour Energy has contracted a multipurpose drill rig which isself‐driven allowing it to be very mobile in remote areas without needing additional support vehicles for rig moves. Costs are substantially lower than bigger deeper drilling petroleum rigs.

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LNG World News Staff, September 16, 2013; Image: Armour Energy