Australis Report Analysis and Projected Future Drilling Sites
The Managing Director of Australis Oil and Gas, Ian Lusted, provided an online “Initial Drilling Update” on August 30, 2018.
Here is the link to the presentation.
http://www.australisoil.com/irm/PDF/1450_2/InitialWellProgramUpdate
The presentation is mostly provided for investors, but has a great deal of information that is helpful to anyone interested in the Tuscaloosa Marine Shale. I encourage you to listen to the presentation yourself and follow along with the slides provided.
I would also like to add a little insight from the ground level, so to speak, of information I believe most of our followers here would find of interest.
Here goes.
Officially, Australis TMS spud (began drilling) the Stewart 30H-1 at 1:30 a.m. central time on August 19 by Rig 10 of Energy Drilling Company. This well is permitted to turn north for a proposed 8,000’ lateral once reaching a proposed vertical depth of 11,950’.
It is my understanding that Energy Drilling completed its task of drilling the first 3,200’ and cementing in the surface casing. This depth provides the first line of protection of the oil well from contamination of the potable water supply.
It is my further understanding that Energy Drilling has begun drilling the first 3200’ of the Bergold 29H-2. This hole will ultimately turn south.
Per Mr. Lusted, the larger Nabors Pace X750 Drilling Rig will move from the Haynesville Shale play in north Louisiana likely in the second half of September to complete the drilling of these wells. If so, I would anticipate both of these wells being drilled to bottom hole depth by early November.
The pad from which the Stewart 30H-1 and Bergold 29H-2 are being drilled was mostly prepared by Australis in 2014 and is located on the north side of MS Hwy 584 roughly 2 miles east/southeast of Gillsburg, MS in Township 1N, Range 6 East in Amite County, Mississippi.
The next announced drilling will be for the Taylor 27H-1 (drilled north from location) and Williams 26H-2 (drilled south from location). The drilling pad is in the final stages of construction as of today.
Reportedly the final application of rocks on a portion of the road and the final application of and cementing of rocks on site appear to be all that remains. However, power and other infrastructure may be installed prior to this rock being applied. I would not anticipate this site being finished until late next week.
This site is located roughly 2 miles west of the beginning of Bean Road from MS Hwy 584, south/southwest of Gillsburg, MS in Township 1 North, Range 5 East in Amite County, Mississippi.
As noted in the presentation, these 2 pair of wells are located due east and due west of the Lawson 25-13H-1, the best TMS well.
Mr. Lusted stated that six more wells have been selected to complete the initial 10 well drilling plans, but did not name those wells.
He did, however, state criteria used for site selection.
Using wells with approved drilling permits and wells I’ve seen scheduled for the September docket, here are the potential wells (paired, as appropriate) from which the next six wells may be selected.
Baker 28H-1 paired with Vaughn 30H-1
Betz 9-1H and Betz 9-2H paired with Flowers 10-2H and Flowers 10-1H
Lyons 35-24 3H
Mathieu 2-11 paired with Willson 1-12 2H and Willson 1-12 4H
Pintard 28-25 3H
Quin 41-30 1H and Quin 41-30 3H paired with Saxby 3-10 2H and Saxby 3-10 4-H
Mr. Lusted stated the objective of the initial drilling plans was to demonstrate Australis could replicate (or exceed) the average productivity success of Encana’s last 15 wells using today’s costs and thereby prove the underlying value of its TMS holdings.
Criteria for sites selected for drilling were to be located near to successful wells, yet to continue to delineate the play and, obviously, to enlarge its lease holdings held by production.
Based on these criteria, I would think that 3 of the 4 paired sites are more likely to be selected for drilling rather than the unpaired single wells in existing units.
The Betz/Flowers pairing seems the most likely to be selected since it would widen the delineation of the play slightly to the north. These units are located directly north of the Lyons unit on the northwest side of the play at the edge of Amite County in Township 2 North, Range 2 East. Two wells were drilled in the Lyons unit. One was a very good well, the other well had drilling/completion issues.
The other three pairings surround the Longleaf 29H unit where the two most successful wells drilled in one unit are located (Longleaf 29H-1 and 29H-2) and are near to or adjacent to the Anderson 18H unit, which is one of the early successful wells in the play. The Longleaf 29H unit is located in Township 2 North, Range 4 East, while the Anderson 18H is in Township 1 North, Range 5 East, all in Amite County.
My guess is the two proposed units with the easiest site preparations will be the ones selected. With this in mind, the Mathieu/Willson pairing seems the most likely of the three since the original site location was changed, presumably to select a better pad site.
I’m guessing the final pairing to be the Baker/Vaughn since it will delineate the play a little more than the Quin/Saxby pairing. Also, the Vaughn unit is a larger unit offering the opportunity for a longer lateral and, thereby, a potentially higher producing well and more acreage held by production.
All that said, the Lyons and Pintard single wells could certainly be selected. They do have the advantage of not requiring any site prep to drill. The flip side is that these wells are in existing units and would not add to the inventory of lease acreage held by production.
And, of course, I could have missed some wells and/or other wells could be permitted later. For example, I’ve been told there is a possibility that the adjacent May and Taggart units in Township 2 North, Range 3 East could be permitted and there are several other double unit possibilities that could easily be in the works.
So, as always, Stay tuned!
