SOURCE: Target Energy Limited

Target Energy Limited

January 30, 2014 13:02 ET

Target Energy Limited Issues December 2013 Quarterly Report

WEST PERTH, AUSTRALIA--(Marketwired - Jan 30, 2014) -  US-focused oil and gas producer Target Energy Limited ("Target") (OTCQX: TEXQY) (ASX: TEX) is pleased to issue its Quarterly Report for the quarter ending 31 December 2013.

  • Sydney #2 drilled and presently being completed
  • Wagga Wagga #1 completion to follow
  • Extreme winter weather in Permian Basin affects production

1. Operations

Permian Basin, Texas

1.1. Fairway Project - Howard & Glasscock Counties (Target 45%-60% WI)

1.1.1. Drilling

Sydney #2 (Target 60% WI)

Sydney #2 is located approximately 800 metres east of Sydney #1 and targeted both the Wolfberry and Fusselman sections. Drilling operations commenced on 26 November 2013, with the well reaching a Total Depth of 3,040.4m (9,975 ft) on 7 December 2013. Good shows were encountered while drilling and subsequent wireline log analysis indicated potential pay in the target intervals. The Fusselman Formation was intersected 13 metres (42 feet) updip to that of the nearby Sydney #1 oil well.

At the time of writing, completion operations were underway at Sydney #2, with a preliminary flow test yielding an oil flow rate of 75 BO in 19.5 hrs (equivalent to 92 BOPD). The oil was accompanied by a large amount of water (approx. 800 BW), which appears to be flowing from vertically extensive fractures. Work is underway to minimise the water flow.

 
Well Reporting Summary
Name and Type of Well Sydney #2, Step Out/Appraisal (Oil)
Well Location Glasscock Co, Texas
Permit NW/4 & E/2 S 188 Block 29 A‐170 W&NW Survey
TEX Working Interest 60%
Geological Rock Type Fusselman Carbonate
Depth of Zones Tested 3040m
Type of Tests Undertaken Preliminary Flow testing
Duration of Tests Undertaken 19.5 hours
Hydrocarbon Phases Recovered 75 Barrels of Oil (8.6%)
Other recovery 800 Barrels of Formation Water (91.4%)
Choke Size Used Open
Flow Rates 92 BOPD
Number of Fracture Stimulations Nil
Material Volumes of Non-Hydrocarbon Gases Nil
   

Wagga Wagga #1 (Target 45% WI)

Wagga Wagga #1 is located 8.5 km (5.3 miles) south east of the Sydney #1 well (Fig 1) and targeted the Ellenburger, Fusselman and Wolfberry sections. Operations commenced on 14 October 2013, with the well encountering good oil and gas shows while drilling and reaching a Total Depth of 3,057m (10,030 ft) on 27 October 2013. Subsequent wireline log analysis indicated potential pay in the Ellenburger and Fusselman/Devonian sections as well as within the Wolfberry interval. The Ellenburger and Fusselman zones will be tested and produced prior to completing the well in the Wolfberry section. A completion rig is expected to be on site in the last week of January 2014.

1.1.2. Forward Program

2014 Drilling Program

A further nine wells are planned to be drilled in the Fairway Project including new wells on the Company's BOA, Ballarat, Bunbury and Taree lease-holdings.

Louisiana

1.2. East Chalkley (Target Energy 35% WI)

The East Chalkley project is an oil field appraisal and development program, approximately 33 kilometres (20 miles) southeast of the town of Lake Charles in Cameron Parish, Louisiana. The oil accumulation, on the east flank of the Chalkley Field, is a previously unidentified down-dip oil leg associated with the gas field.

1.2.1. Drilling

Pine Pasture #3 (Target Energy 35% WI)

Pine Pasture #3 was drilled in June 2013 to a depth of 3,011.5m (9,880 ft) as a development well, with wireline logs confirming the presence of approximately 8 metres of potential net pay in the Alliance W2 sands at a depth of 2,947m (9670 ft), similar to - and 8 metres updip from - the Pine Pasture #2 oil well. The well was subsequently cased for production and completed and brought on-line on 7 October 2013.

Production has been restricted by problems associated with the down‐hole pump assembly -- initially as a consequence of the pump frequently shutting itself down. Subsequent re-programming has largely eliminated this issue, but overall production volumes from Pine Pasture #3 remain low (average in December: 8 BOPD / 30 mcfg / 84 BWPD), potentially as a result of a down-hole blockage, in turn probably a consequence of the initial pump issues. The partners are presently analysing pump and well performance data ahead of implementing a remediation program.

2. Current Indicative Drilling Schedule

             
Estimated
Timing*
  Prospect   Location   Target
Working Interest (WI)
Completion Imminent   Wagga Wagga #1   Howard Co, Tx   45%
Completion Underway   Sydney #2   Glasscock Co, Tx   60%
Q1 2014   BOA North #3 / BOA North #4   Howard Co, Tx   60%
Q2 2014   Ballarat #1 / Wagga Wagga #2   Glasscock Co   60-45%
Q3 2014   Bunbury #1 / Taree #1 / BOA North #5   Howard / Glasscock Co   60%
Q4 2014   Darwin #4 / Ballarat #2   Howard / Glasscock Co   60%
             

*Timing indicative only - actual order, timing and well selection will vary.

3. Production (1 Oct - 31 Dec)

                                     
Project   TEX WI   Gross Gas Prodn in Period (mmcf)   Cumulative Gross Gas Prodn (mmcf)   Net Gas Prodn in Period (mmcf)   Cumulative Net Gas Prodn
(mmcf)
  Gross Oil Prodn in period (BO)   Cumulative Gross
Oil Prodn (BO)
  Net Oil Prodn in Period (BO)   Cumulative Net Oil Prodn
(BO)
Section 28   25%   32.8   2,342.1   8.2   585.5   423   90,768.0   106   22,692
East Chalkley   35%   10.4   53.4   3.6   18.7   3,834   111,771.5   1,342   39,120
Merta   25%   10.7   387.0   2.7   96.8   8   5,052.7   2   1,263
Fairway+   60%   25.2   110.3   15.1   66.2   10,672   71,974.9   6,403   43,185
Total       79.1   2,892.8   29.6   767.2   14,936.6   279,567.1   7,852.7   106,260.1
                                     

Net Production is scaled to Target's Working Interest, before royalties; mmcf = million of cubic feet; mmcfgd = million cubic feet of gas per day; BO = barrels of oil, BOPD = barrels of oil per day, BOEPD = barrels of oil equivalent per day (Target reports a thermal equivalent when combining gas and oil production, where 1BOE = 6 mcf).

+Permian Basin production was adversely affected by extreme weather in the region from late November 2013 through to early January 2014.

4. Lease Holdings

Project   Lease / Unit   Basin   Description   Depth Limits   TEX WI     Royalty     Gross Acres   Net Acres
Fairway                                    
    BOA   Permian   S12, Block 33, T-2S, A-1353; T&P RR Co Survey, Howard Co   None   60 %   25 %   640.0   384.0
    Darwin   Permian   S44, Block 33, T-1S, A-1292; T&P RR Co Survey, Howard Co   None   60 %   25 %   640.0   384.0
    Bunbury   Permian   S102 A-1405; S103 A-1405; S104 A-1495; Bl 29 W&NW RR Co, Howard Co   None   60 %   25 %   918.0   550.8
    Ballarat   Permian   S 184 & 185, Bl 28, A-815 & A-A483; W&NW RR Survey, Glasscock Co   None   60 %   25 %   355.7   213.4
    Taree   Permian   S193, Bl 28, A-815 and A-A483; W&NW RR Co Survey, Glasscock Co   None   60 %   25 %   320.0   192.0
    Sydney   Permian   S188 Block 29 A-170; W&NW RR Co Survey, Glasscock Co   None   60 %   25 %   480.0   288.0
    Unnamed   Permian   S4, Block 32, T-2-S, A-1354; T & P RR Co Survey, Howard Co   None   60 %   25 %   610.0   366.0
    Unnamed   Permian   S24, Bl 35 A-1538; S26 Bl 35 A-1415; T&P RR Co Survey, Howard Co   None   60 %   25 %   260.0   156.0
    Wagga Wagga   Permian   S221, Block 29, A-496; W&NW RR Co Survey, Glasscock Co   None   45 %   25 %   305.0   137.3
Merta                                    
    Merta No. 1 Well Gas Unit No. 2   Gulf Coast   S3 A-219 International and Great Northern RR Co Survey, Wharton Co   7,650 ft - 7,880 ft   25 %   25.7 %   303.0   75.7
Section 28                                    
    SML #A-1, A-3 Unit   Gulf Coast   St Martin Ph   None   25 %   28 %   40.0   10.0
    SML #A-2 Unit   Gulf Coast   St Martin Ph   None   25 %   28 %   40.0   10.0
E Chalkley                                    
    Unit Agreement: CK W RA SU   Gulf Coast   S11, 13, 14 &15, T12S-R6W, Cameron Ph   8,000 ft - 10,000 ft   35 %   30.5 %   714.9   250.2
                    Total           5626   3017
             

There were no changes in Target's lease-holdings during the reporting period.

Laurence Roe
Managing Director

NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information in this report has been reviewed and signed off by Mr Laurence Roe, B Sc, Managing Director of Target Energy Limited, who is a member of the Society of Exploration Geophysicists and has over 30 years experience in the sector. He consents to the reporting of that information in the form and context in which it appears.

Contact Information

  • CONTACT INFORMATION

    Media Inquiries:
    USA
    Bradley Holmes
    Target Investor Relations (Houston)
    +1 713 304 6962 cell
    +1 713 654 4009 direct

    Laurence Roe
    Target Energy
    +1 713 275 9800 direct

    Australia
    Ross Dinsdale
    Business Development Manager (Perth)
    +61 429 702 970 cell
    +61 8 9476 9000 direct