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Independent Certification Confirms West Erregulla 2C of 513 Bscf Gross

Source: 5/18/2020, Location: Not categorized

Warrego Energy Limited (WGO), provides the following update in relation to Contingent and Prospective Resources for the West Erregulla gas field following the completion of an independent, third party review by Perth-based RISC Advisory Pty Ltd (RISC). The West Erregulla gas field, located in EP 469, onshore Perth Basin, Western Australia, is 50% owned by Warrego.

The independent, third party review and evaluation of West Erregulla was commissioned by Warrego to provide certainty to potential gas buyers and optimise term and price outcomes in negotiations for gas processing and sales.

Warrego’s Managing Director and Group CEO, Mr Dennis Donald, said:
“To achieve certified 2C Contingent Resources of 513 Bscf gross from only one well confirms West Erregulla’s status as a world class asset with significant upside potential. To put this in perspective, three wells were drilled on the nearby Waitsia field before similar volumes were booked.

“Importantly, independent third-party certification also provides a high level of certainty to prospective gas buyers as well as potential suppliers and stakeholders. It also enables Warrego to target optimal outcomes when negotiating gas sales and processing arrangements,” he said.

“Discussions with a number of potential gas buyers are well advanced and we are actively progressing commercialisation options.

“We are excited about commencing the West Erregulla 3 and 4 drilling campaign in the second half of 2020. The additional data we expect to acquire over the drilling campaign has the potential to further increase our contingent resources, particularly from the Northern Area of the field which has not yet been drilled,” said Mr Donald.

The West Erregulla field is an elongated north-south four-way dip closed structure, approximately 10 km long by 4 km wide with a structural relief in the order of 100 m. West Erregulla-2 encountered gas in four Permian reservoirs with the Kingia sandstone being the primary reservoir in terms of resources and producibility. West Erregulla-2 was the deepest onshore well ever drilled in Australia with the Kingia reservoir encountered at over 4,500 mSS. The well flow tested up to 69 MMscf/d from the Kingia reservoir; consistent with test results from the Kingia reservoir at Waitsia.

The review by RISC confirms that West Erregulla is a significant gas discovery with low risk exploration upside. The Kingia is classified as a high quality, conventional gas reservoir. Additional data and further testing of the High Cliff, Dongara and Wagina reservoirs will be undertaken in the planned West Erregulla 3 and 4 wells to allow for a more definitive classification to be determined. Positive results may allow for higher recovery factors to be applied to these reservoirs in future.

In accordance with the Society of Petroleum Engineers’ internationally recognised Petroleum Resources Management System (PRMS 2018), Warrego subdivided the West Erregulla field into a Central Area and a Northern Area. Seismic attributes were not used to assess the extent of the field.

In the Central Area, the West Erregulla-1 well intersected the Dongara reservoir while the West Erregulla-2 well intersected the Dongara, Wagina, Kingia and High Cliff reservoirs. The Central Area has been classified by RISC as a contingent resource (development unclarified). The resources can move to reserves when a commercial development plan is clarified and approved with associated gas sales.

The Kingia reservoir at West Erregulla is deeper and higher pressure than at Waitsia resulting in potentially higher recovery factors. The high productivity Kingia is estimated to deplete in a production phase with gas recovery factors up to 90%.

Further wells, testing and data are likely to reduce uncertainty and may potentially result in revisions to these estimates. Gross rock volume is the key variable for field modelling and further appraisal is required to assess:

• Resource extension into the Northern Area;
• Gas Water Contact (yet to be encountered);
• Reservoir productivity from the High Cliff, Wagina and Dongara reservoirs; and
• Gas composition in the Wagina and High Cliff sandstones.

The Joint Venture Partners in EP 469 are:
Warrego Energy Limited (ASX: WGO) (via subsidiaries) 50%
Strike Energy Ltd (ASX: STX) (via subsidiaries, Operator) 50%

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