Beacon Energy shares were down heavily on Monday after announcing delays to their German Schwarzbach-2 drill programme.
Beacon Energy announced an update on its Schwarzbach-2(2.) well in Germany, revealing delays in the works on the well that has previously encountered ‘excellent’ oil-bearing reservoirs.
Beacon Energy previously announced drilling found a 34-metre gross interval containing 28 metres of net oil-bearing reservoirs in the Pechelbronner-Schichten (PBS) sandstones. These were encountered 25 metres higher and 10 metres thicker than expected, with porosities averaging 18% in the Lower PBS and 21% in the Upper PBS. No water-bearing sands were found in the 42-metre hydrocarbon column.
According to Beacon, the positive reservoir properties indicate the well could achieve an initial production rate above 900 barrels of oil per day. Higher rates have been achieved on historic wells nearby.
However, the company revealed delays in the program on Monday. Following perforation and acidisation, reservoir clean-up commenced but has produced a mixture of oil, gas and drilling fluids. The drilling rig must now be released before clean-up is complete.
Beacon said commercial production is still expected using a rod pump with capacity for 250 barrels per day. An electrical submersible pump with higher capacity could be installed later. The rod pump is slated for installation in October, after further clean-up into the wellbore.
The company said it will start to work immediately to quantify expected reserve and resource increases thanks to the well results. Development plans will also be updated to maximise the value of the asset.
“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,” said Beacon Energy Chief Executive Officer, Larry Bottomley.
“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).”
Beacon Energy shares were down 22% at the time of writing.