Page 10 - Icon Energy 2014 Annual Report

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ICON ENERGY LIMITED

2014 Annual Report ABN 61 058 454 569

REVIEW OF OPERATIONS

Icon Energy in conjunction with Beach Energy (

Operator

)

and Chevron Australia has continued building on the

excellent results achieved during the 2012- 2013 financial

year where the Joint Venture (

JV

) drilled the Halifax-1

vertical well. The Halifax-1 well produced the highest flow

rate of 4.2MMscf/d from a shale gas well and a Notice of

Petroleum Discovery was lodged with the DNRM.

During the past 18 months the JV has drilled six wells,

Halifax-1, Hervey-1, Keppel-1, Geoffrey-1, Redland-1 and

Etty-1 and the ongoing drilling program, utilizing new and

improved technologies and processes, is designed to

evaluate the unconventional basin centred gas play within

the Permian formations of the Nappamerri Trough in the

Cooper Basin. These wells are critical for experimentation

purposes in the research and development program.

During this drilling program, elevated gas shows have

been encountered over intervals in excess of 1,300 metres

throughout the Permian formations. The wells drilled so far

have encountered very thick horizons with 460 metres of

the Roseneath, Epsilon and Murteree Formations (

REM

)

and 490 metres of the Patchawarra formation at total depth.

All these horizons appear to be over-pressured throughout.

In July 2013 the JV recommenced its drilling program with

two rigs actively engaged in the permit. Drilling of the

Keppel-1 and Hervey-1 vertical wells continued in July 2013

with encouraging results encountering gas shows across

the entire Permian sections penetrated. Keppel-1, located

25km north-east of Halifax-1, is located in the deepest

section of the Nappamerri Trough and was scheduled to be

drilled to a depth of 4,890 metres. Keppel-1 experienced

an influx of high pressure gas which required well control

measures to be put in place to isolate the interval. As a

result the well was plugged back and suspended, waiting

on further assessment.

Hervey-1, located 30km east of Halifax-1, was drilled

through the Patchawarra Formation to a total depth of

4,269 metres. Both wells confirmed the continuation of

the basin centred gas play in the Permian formation across

the southern portion of the Nappamerri Trough. Notices

of Petroleum Discovery were lodged with DNRM for the

Keppel-1 and Hervey-1 wells.

The Geoffrey-1 vertical well is located 36km to the north-

east of Hervey-1 and was drilled to evaluate the shale and

basin centred gas play in theToolachee, Daralingie, REM

and Patchawarra Formation intervals in the east of the

Permit. The well was drilled in October 2013 to a depth of

4,125 metres and encountered excellent gas shows across

the entire Permian section. The Geoffrey-1 well exhibited

high over-pressuring at total depth.

Diagram of Hervey-1 showing the target zones proposed for fracture stimulation and then

flow testing.

HERVEY-1

Pre-Permian Sequence

Steel casing

cemented

in place

Patchawarra Formation

Murteree Shale

Epsilon Formation

Roseneath Shale

Daralingie Formation

Toolachee Formation

Nappamerri Group

Jurassic Sediments

Early Cretaceous

Sediments

Diagram of Geoffrey-1 showing the target zones proposed for fracture stimulation and

then flow testing.

GEOFFREY-1