Shale gas stocks sold off but signs are positive
There are hopes that Australia can replicate the shale gas boom in the US, with the amount of recoverable shale gas in the Cooper Basin estimated at 85 trillion cubic feet by the US Energy Information Administration, but development has so far been slow.
Late on Friday afternoon Beach reported that the Moonta-1 unconventional vertical well had flowed gas at a maximum controlled rate of 2.6 million square feet per day (MMscfd) and was now flowing at 1.6MMscfd.
The disappointing rate fell short of expectations of up to 4MMscfd, said the Macquarie analyst Kirit Hira, based on Beach's two earlier Cooper Basin shale gas wells Encounter and Holdfast.
Beach shares fell by 9 per cent on Monday, or 12.5¢, to $1.33, while partner Icon Energy fell more than 6 per cent to 22¢ and both Drillsearch and Senex Energy fell 4 per cent, to $1.41 and 70¢ respectively.
A spokesman for Beach said there was an "element of surprise" at the sell-off, given the company was in the early stages of an exploration program.
The spokesman said Beach was "on a learning curve" to identify the sweet spots in the Nappamerri Trough and the drilling at Moonta had confirmed there was shale gas at depth in the Cooper Basin.
The next flow rates, from the Halifax well - held 60:40 by Beach and Icon - would be reported by early to mid next month.
Last year Santos announced the first commercial production of shale gas from the Cooper Basin, at the Moomba-191 well, which is still flowing at 2.5MMscfd, indicating flow rates will halve each year, a better decline rate than the US.
But a Wilson HTM analyst, John Young, said the Beach result was "reasonable". "I don't think this one well result means the whole [Cooper Basin shale play] won't work," he said.
"We're only three wells into an 11-well program. The actual flow rate was better than the two prior wells."
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Investors sold off shale gas stocks after Beach Energy reported a lower-than-expected flow rate from the Moonta-1 well. The result fell short of some estimates (Macquarie had expected up to about 4 MMscfd) and triggered a broad market reaction even though Beach said the program is still in early exploration stages.
Beach reported the Moonta-1 unconventional vertical well flowed gas at a maximum controlled rate of 2.6 million cubic feet per day (MMscfd) and was then flowing at about 1.6 MMscfd.
Beach Energy shares fell about 9% to $1.33. Partner Icon Energy fell more than 6% to 22¢, and both Drillsearch and Senex Energy dropped roughly 4% to $1.41 and 70¢ respectively. A Beach spokesman said there was an “element of surprise” at the sell-off given the early stage of the program.
The US Energy Information Administration estimated recoverable shale gas in the Cooper Basin at about 85 trillion cubic feet. The article notes there are hopes Australia could replicate the US shale boom, but development in the Cooper Basin has so far been slow.
A Macquarie analyst, Kirit Hira, said the Moonta result was disappointing versus expectations from prior wells. Beach’s spokesman said the company is on a “learning curve” identifying sweet spots and that Moonta confirmed shale gas at depth. Wilson HTM analyst John Young called the result “reasonable” and noted it’s only the third well in an 11-well program, so one well doesn’t determine the whole play.
The article notes Santos’ Moomba-191 well is still flowing at about 2.5 MMscfd and indicates flow rates in the Cooper Basin could halve each year — which the piece describes as a better decline rate than seen in the US.
The next reported flow rates will come from the Halifax well, which is held 60:40 by Beach and Icon. Those figures were expected to be reported by early to mid next month, according to the article.
The article mentions Beach Energy (Moonta-1, Halifax), Icon Energy (partner on Halifax), Drillsearch, Senex Energy, Santos (Moomba-191), and earlier Cooper Basin shale wells named Encounter and Holdfast.
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