Armour Energy has been granted EP171, EP176, EP174 and EP190 and has 13 additional permits pending grant in the Northern Territory. This is a footprint of approximately 29.4 million acres and covers the McArthur, South Nicholson and Georgina Basins.
Armour has delineated a series of eighteen (18) conventional gas prospects holding 314PJ of risked, prospective resources in the Coxco Dolomite of the Teena Formation, a conventional, free-flowing reservoir in the Batten Trough, McArthur Basin. These conventional gas accumulations, discovered by Armour in the course of drilling the Glyde 1 ST1 lateral well in August 2012, occur within the porous and permeable dolomites of the Coxco Dolomite.
The permeability in the Coxco Dolomite is believed to be formed by structural brecciation and fracturing along the Emu and Tawallah Faults, together with talus or scree breccias occuring adjacent to faults and areas of solution brecciation in contact with the organic rich shale source rock of the Middle Proterozoic, Barney Creek Formation.
The geology of the Coxco targets has been defined by surface mapping and preliminary data from extensive airborne gravity and magnetic surveys recently completed by the Company over the Glyde and Myrtle Sub Basin regions. Additional targets are likely to be defined following completion of the Fugro interpretation of this gravity, magnetic and geological data and integration with other ongoing and parallel structural studies. Recently, Fugro’s techniques were able to assist operators in the Canning Basin to make substantial hydrocarbon discoveries. Like them, Armour anticipates these interpretations will provide additional drilling targets and high-grade areas to strategically locate further 2-D seismic and magnetotelluric surveys.
The targets for the Coxco Dolomite in EPs 171, 176 and 190 within the Batten Trough are located in the Glyde Sub Basin, the Myrtle Sub Basin to the south of McArthur River Mine, and to the north in the Caranbirini area. These targets are based on further surface geological studies and the extensive geophysical survey (magnetics and gravity) indicating targets with the same geophysical and geological characteristics as the gas accumulation discovered by Armour in the Glyde 1 ST 1 well. This update includes areas previously highlighted with 130BCF of mean prospective conventional resources estimated (now superseded) for the Glyde Sub-Basin based on the Glyde 1 ST1 well.
These conventional targets have an average depth of 1,200 metres and vary in size from 6PJ to 43PJ and combine to a total of 314PJ of risked, prospective resources. Modelling based on the Glyde 1 ST1 flow and buildup test data indicates these targets should be free flowing.
Based on realistic risking applied for discovery and development, drilling of 21 wells across these targets has the potential to generate a 2C Contingent Resource of 314PJ of gas. This outcome would double the previously announced mean prospective resource of 130BCF (156PJ) for the Glyde Sub Basin in the southern Batten Trough, containing the Glyde 1 ST1 discovery well. A feasibility study will be undertaken to confirm the viability of and market for produced gas, in order to complete conditions precedent of a potential contract to convert this to 314PJ to 2P Reserves.
Armour continues to investigate numerous market opportunities in the area.
Armour is currently preparing to intensify its programme in the Batten Trough with the aim of defining reserves quickly. Armour is presently assessing existing seismic data on an east-to-west line in the northern section of the Batten Trough and with a view to early definition of additional gas exploration prospects. In addition, Armour plans to identify additional conventional gas targets to the east and north within the Batten Trough in the recently granted EP 174 and EP 190 permits, where similar geological structures and petroleum source rocks exist. Further analyses and additional geophysical surveys will follow the results of exploration drilling at Caranbirini, Cat Fish Hole and Myrtle Sub Basin and are likely to lead to further upgrading of the Company’s gas resource outlook in the Northern Territory.
Armour also continues to focus on its extensive unconventional naturally-fractured and shale gas accumulations in the Batten Trough with a current mean prospective resource of 18.7TCF estimated within the Lynott, Reward and Barney Creek Formations.
Armour has previously reported discoveries of unconventional gas accumulations in the Lynott and Reward Formations at the Greater Cow Lagoon Structure of 100.4BCF (120PJ), located north of the McArthur River Mine. Further unconventional resources are expected at the Ryan’s Bend, Looking Glass and Batten Creek targets to the west of the Greater Cow Lagoon Structure.
The gas discovery in the Barney Creek Formation at the Glyde 1 vertical well substantiates MBA Petroleum Consultants' estimate of a mean prospective resource of 18.6TCF in the Barney Creek Shale within EP 171 and EP 176. A P90 (or 90% probability level) of 3.6TCF recoverable gas resource was assessed by MBA Petroleum Consultants for this same area.
As with the Cow Lagoon 1, Glyde 1 and Glyde 1 ST1 wells, Armour will continue to gather extensive data to further substantiate the unconventional resource potential of the Barney Creek Formation. Several studies are underway on the Barney Creek Formation samples and log data from Cow Lagoon 1, Glyde 1, and Glyde 1 ST1 wells that will aid further targeting of a future lateral well with fracture stimulation in the Barney Creek Formation. As with the Glyde 1 and Glyde 1 ST1 wells, this lateral drilling prospect will likely be performed in conjunction with a vertical well exploring the underlying Coxco Dolomite.
The resource estimates used above were, where indicated, compiled by MBA Petroleum Consultants, and detailed in the Independent Expert’s Report, Replacement Prospectus dated 20 March 2012 for Armour Energy (Chapter 9). Raymond L Johnson Jr., General Manager Exploration and Production for Armour Energy, is qualified in accordance with the requirements of ASX listing rule 5.11 and has consented to the use of the resource figures in the form and context in which they appear in this announcement.