Beacon Energy Announces Schwarzbach-2 Well Update

Beacon Energy (BCE), the full-cycle oil and gas company with a portfolio of production, development, appraisal and exploration onshore German assets through its wholly-owned subsidiary, Rhein Petroleum GmbH ("Rhein Petroleum"), announces an update on the Schwarzbach-2(2.) ("SCHB-2(2.)") well.

SUMMARY
- As previously announced, the SCHB-2(2.) well has encountered an excellent 34-metre gross interval containing 28 metres of oil-bearing net reservoirs in the Pechelbronner-Schichten ("PBS") sandstones within the Stockstadt Mitte segment of the Erfelden field.
- These oil-bearing reservoirs were encountered approximately 25 metres high and 10 metres thicker than prognosis, with porosities averaging 18% in the Lower PBS and 21% in the Upper PBS, with no water-bearing sands in the 42m hydrocarbon column.
- As all these metrics are above or at the top of the range of pre-drill expectations, the likelihood is that this will result in a material upgrade to recoverable reserves in Stockstadt Mitte and a de-risking of 2.4 million barrels of contingent resources already ascribed to Schwarzbach South.
- Based on these excellent reservoir properties and the light oil recovered, standard oil-industry analysis indicates that an initial production rate in excess of 900 barrels of oil per day ("bopd") could be achieved. Higher rates of production have been achieved on historic wells in the area.
- Following perforation and acidization, reservoir clean-up operations commenced on Friday 8 September 2023 and since that time the well has produced a mixture of oil, gas and drilling fluids.
- Given delays in the programme the drilling rig must now be released but clean-up of the well will continue on site.
- Commercial production is expected to commence from the well aided by the installation of a rod pump which will have the capacity to deliver up to 250 bopd. This will not require a workover rig. It is expected that once the well is fully cleaned up and this rate has been achieved, the rod pump will be replaced with an Electrical Submersible Pump ("ESP") which has higher capacity.

FORWARD PLAN
- Installation of the rod pump is expected to be undertaken during October. In the interim period reservoir clean-up will continue into the wellbore.
- Work will commence immediately to quantify expected reserve and resources increases.
- Existing development plans will be updated to reflect learnings from the SCHB-2(2.) well and increased resource base with the aim of accelerating drilling and maximising the value of this highly attractive asset.

Beacon Energy Chief Executive Officer, Larry Bottomley commented:
"The SCHB2(2.) well has been a challenging well from an operational perspective, with hole stability issues encountered in the initial and sidetracked hole sections, however it has encountered an excellent oil-bearing reservoir with thickness and properties that are far in excess of pre-drill prognosis.

The data we have gathered during the drilling of the SCHB2(2.) well indicates the potential for substantial reserve and production upside for the Stockstadt Mitte segment - up to and potentially more than the High Case (5.8 mmbbls) outlined in the Company's December 2022 CPR which clearly bodes well for the long-term value we believe we can realise from the asset.

We believe this well has the potential to deliver at very high rates and establishing these flowrates through clean-up of the wellbore, and eventual installation of an ESP is now our top priority although we won't be able to provide definitive guidance on production expectations until we have completed the clean-up and artificial lift solutions. At flow rates of 900 bopd, the Company would expect to deliver operating cash flows in excess of US$1.5 million per month (assuming $80/bbl Brent).

A comprehensive review of the drilling and completion operations and the technical challenges encountered will be undertaken so that lessons learned are incorporated into an updated field development plan.

The data provided from the SCHB-2(2.) well will also be incorporated into a field-wide study to understand the impact on both the risk and quantum of resources in the Schwarzbach South segment, currently assigned 2C contingent resources of 2.4mmbbls which will be targeted during the further development of the Erfelden field.

While the delay to fully understanding the production potential of this well is frustrating, the sub-surface results far exceed our pre-acquisition and pre-drilling expectation and we therefore remain pleased with the overall results of the SCHB2(2.) well and look forward to providing an update in due course."