The Directors of Armour Energy Ltd are pleased to advise that the Company has entered into a contract with Halliburton Energy Services for supply of hydraulic stimulation services for the planned 2013 exploration and appraisal program in the Company’s wholly owned ATP 1087 tenement in North Queensland, located approximately 300km north of Mt Isa. Halliburton is a proven service provider in other Australian shale plays.
The wells planned for the 2013 Queensland exploration program will be drilled by Silver City Drillers under the drilling contract announced to the market on 5 February 2013.
The target Lawn 4 Shale Formation contains a typically 125m thick, organic-rich source rock section showing up to 8% gas recorded in mud logs during drilling of four petroleum exploration wells by Comalco in the early 1990s. These wells are now located within ATP 1087 and in conjunction with more than 1100km of existing seismic data delineate an immediate Lawn 4 Shale exploration target area of approx. 1400 km˛ within the eastern area of ATP 1087.
Armour’s independent experts have previously assessed 22.5 trillion cubic feet of mean prospective gas resource in the Proterozoic aged Lawn Hill 4 Shale in ATP 1087. Additional gas prospectivity has also been identified by Armour in the underlying Riversleigh Shale that extends a gas exploration fairway of an additional 6000 km˛ to the west across ATP 1087 and south into ATP 1107.
The Company has finalised three initial drill sites. During the 2013 drilling campaign Armour proposes to drill three vertical wells and one lateral well targeting the Lawn Hill Shale. The first well to be drilled will be the Egilabria 2 vertical well. This will target the eastern area of ATP 1087 near the Egilibria 1 well, which recorded up to 8% gas (390 gas units) on mud logs during drilling by Comalco in 1992.
Armour has secured key stimulation equipment from North America including ‘swellable’ isolation packers and ball-actuated multi-stage sleeves in order to execute a 6 stage hydraulic stimulation treatment in the Egilabria 2 DW1 lateral well. The lateral well will be a sidetrack well from the Egilabria vertical well, and will target the highly prospective Lawn Hill 4 interval.
Ray Johnson, Armour’s General Manager of Exploration and Production, has 32 years of experience in hydraulic stimulation design, execution and evaluation of shale oil and gas reservoirs throughout North America, including the Mancos, Bakken, Eagleford, Niobrara and Wolfcamp shale reservoirs.
He noted that 'Armour has performed extensive 3D hydraulic stimulation modelling using the Egilabria 1 well log data and has extensive mineralogical data from a number of Egilabria 1 cuttings studies. These allow Armour and Halliburton to pre-plan the treatment sizing, fluids, additives and proppant strategies to optimise well deliverability from this highly prospective interval.'
The primary target for Armour’s aggressive drilling program over the next three years in ATP 1087 is a 'Lawn Hill Target Area' to define up to 9 trillion cubic feet of gas resources and reserves from the Lawn Hill Shale Play in eastern area of ATP 1087. This is a sufficient gas volume to supply a 6 million tonne per annum Liquefied Natural Gas (LNG) project for a period of 25 years.