Beacon Energy shares sank on Monday after the oil and gas exploration and production company with onshore assets in Germany released an update on its Schwarzbach 2(3.) sidetrack well in the Erfelden field.
The company has been unable to establish a stabilised flow rate from the reservoir, and the drill rig is being demobilised. Such was the extent of investor disdain for the update, Beacon Energy shares were down 78% at the time of writing.
The sidetrack well extended 85 meters from the original wellbore at a depth of 2,145 meters, placing it approximately 9 meters away from the original well in the Lower PBS formation.
After installing a production liner and electric submersible pump (ESP), the well began producing intermittently with frequent stalling issues preventing a stabilised flow rate.
Initial data suggests a poor reservoir response, with bottom-hole pressures and flow rates lower than expected. As a result, Beacon has temporarily shut-in the well to allow the drilling rig to demobilise. During this time, the company will obtain pressure build-up data to better analyse the reservoir performance.
“Having safely drilled the SCHB-2 sidetrack and installed the ESP, it is disappointing a sustained flow rate has not yet been achieved. Whilst pressure build up data, to be obtained in the coming days, will provide clarity, the initial response from the reservoir appears disappointing,” said Stewart MacDonald, Incoming CEO of the Beacon Energy.
“Following reconnection to the production facility, a long-term stabilised flow rate should be established. We remain convinced that Erfelden is a material and potentially highly valuable onshore oil discovery with Best Estimated recoverable reserves of 7.2mmbbl. The Company will now consider its options to maximise the value of the resource we have discovered.”
