Target Energy Ltd (TEXQY: OTCQX International) | Target Energy Limited Issues June 2014 Quarterly Report

OTC

Target Energy Limited Issues June 2014 Quarterly Report

Aug 01, 2014

OTC Disclosure News Service

– Target Energy Limited Issues June 2014 Quarterly Report

WEST PERTH, AUSTRALIA–(Marketwired – Aug 1, 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 30 June 2014.

  • Fairway oil production up 11% on prior quarter
  • Company maintains high level of activity in Permian Basin
  • 5 wells drilled back-to-back at Fairway in Q1/Q2 2014
  • Production set to rise as new wells are stimulated
  • Drilling of further 5 Fairway wells to commence in August 2014
  • Company divests 10% Working Interest in Fairway for A$6.2m

1. Operations
Permian Basin, Texas

1.1. Fairway Project – Howard Glasscock Counties (Target 35%-60% WI)

On 30 June 2014, Target Energy executed a transaction in which the Company sold a 10% working interest in its Fairway leases.

Further details regarding the transaction are included in Section 5.1 below.

1.2. Drilling

1.2.1. Wagga Wagga #2 (Target 35% WI)

The Wagga Wagga #2 well is situated approximately 706 metres (2,316 ft) south of Wagga Wagga #1 in Glasscock County. Drilling commenced on 16 April 2014 and concluded with the well reaching its Total Depth at 2,984m (9,790 ft) on 30 April 2014 (Table 1). Analysis of wireline log data indicated that that the well had encountered potential pay in the Wolfberry section and Fusselman Carbonate. The well was completed as an oil producer.

 
 
Well Reporting Summary – Wagga Wagga #2
Name and Type of Well
 
Wagga Wagga #2, Step Out/Appraisal (Oil)
Well Location
 
Glasscock Co, Texas
Lease Description
 
E/2 S221, Block 29, A-496; WNW RR Co Survey
TEX Working Interest
 
35%
Report Date
 
7:00 pm 1/05/14 (Western Aust Standard Time) /
6:00 am 1/05/14 (USA Central Daylight Time)
Current Depth:
 
2,984.0m (Total Depth). All reported depths are measured below the Rotary Table (RT) on the rig floor.
Progress
 
Well spudded 04:00 on 15 April 2014. Drill to Total Depth at 2,984.0m (9,790 ft). Run wireline logs; run and cement 5 1/2″ production casing to 2,984.0m.
 
 
 
 
 
 

Table 1

1.2.2. Homar #1 (Target 50% WI)

Drilling commenced at Homar #1 well on 5 May 2014, with the well reaching a Total Depth of 3,292m (10,800 ft) on 29 May 2014 (Table 2). Homar #1 experienced strong oil and gas shows throughout the Wolfberry section as well as a strong show in the Fusselman Carbonate. The well was completed as an oil and gas producer.

 
 
Well Reporting Summary – Homar #1
Name and Type of Well
 
Homar #1, Oil Exploration Well
Well Location
 
Howard Co, Texas
Lease Description
 
S24, Bl 35 A-1538; TP RR Co Survey, Howard Co
TEX Working Interest
 
50%
Report Date
 
7:00 pm 5/06/14 (Western Aust Standard Time) /
6:00 am 5/06/14 (USA Central Daylight Time)
Current Depth:
 
3,292 m (Total Depth). All reported depths are measured below the Rotary Table (RT) on the rig floor.
Progress
 
Drill ahead to 3,292m (10,800 ft); run and cement production casing. Rig released on 4 June 2014.
 
 
 
 
 
 

Table 2

1.2.3. Ballarat 185 #1 (Target 50% WI)

Drilling commenced at Ballarat 185 #1, approximately 5 kms east of the Sydney lease in Glasscock County, on 7 June 2014 with the well reaching its Total Depth of 3,030m (9,942 ft) on 28 June 2014 (Table 3). Wireline logs indicate potential pay in the Ellenburger, Fusselman and Wolfberry sections. The well will be tested in the Ellenburger and Fusselman zones prior to a decision regarding timing of a fracture stimulation program.

 
 
Well Reporting Summary – Ballarat 185 #1
Name and Type of Well
 
Ballarat 185 #1, Oil Exploration Well
Well Location
 
Glasscock County, Texas
Lease Description
 
S185, Bl 28, A-815 and A-A483, Waco Northwestern Survey
TEX Working Interest
 
50%
Report Date
 
7:00 pm 1/07/14 (Western Aust Standard Time) /
6:00 am 1/07/14 (USA Central Daylight Time)
Current Depth:
 
3,030 m. (Total Depth) All reported depths are measured below the Rotary Table (RT) on the rig floor.
Progress
 
Drill ahead to 1,114m (3,655 ft); run and cement intermediate casing. Drill ahead to 3,030m (9,942 ft); run wireline logs. Run and cement production casing. Rig released on 1 July 2014.
 
 
 
 
 
 

Table 3.

1.3. Completions

1.3.1. Wagga Wagga #2 (Target 35% WI)

A 7-stage fracture stimulation of the Wolfberry section was performed on Wagga Wagga #2 on 7 July 2014 after testing in the Fusselman Carbonate and the Devonian yielded only minor oil. The stimulation covered an interval of 440 metres, using approximately 23,000 barrels of load water. To date approximately 37% of the load water has been recovered, with oil flowing with the load water. At last report the well was flowing 31 BOPD with 178 BW (Table 4).

 
 
Well Reporting Summary – Wagga Wagga #2
Name and Type of Well
 
Wagga Wagga #2, Oil Gas producer
Well Location
 
Glasscock Co, Texas
Lease
 
S221, Block 29, A-496; WNW RR Co Survey, Glasscock Co
TEX Working Interest
 
35%
Geological Rock Type
 
Wolfberry – carbonates, shales and minor sandstone
Depth of Zones Tested
 
2,453m – 2,893m
Type of Tests Undertaken
 
Ongoing flow-back after fracture stimulation
Duration of Tests Undertaken
 
Flowback commenced 9 July 2014
Hydrocarbon Phases Recovered
 
Oil, Gas
Other recovery
 
8,830 Barrels of Load Water (total load now recovered: 38%)
Choke Size Used
  Various
Flow Rates
 
31 BOPD + 178 BWPD (24 July 2014)
Number of Fracture Stimulations
 
7 zones stimulated
Material Volumes of Non-Hydrocarbon Gases
 
Nil
 
 
 
 
 
 

Table 4

1.3.2. BOA 12 #3 (Target 50% WI)

A 4-stage fracture stimulation of the Wolfberry section was performed at BOA 12 #3 on 2 May 2014. The program covered a 225 m interval, using approximately 15,700 barrels of load water. The well was put on pump on 15 May 2014 and averaged 65 BOPD with 139 BWPD Water and 43 mcf of gas until 31 May 2014 (Table 5), at which time the well production was combined with that of BOA 12 #1.

 
 
Well Reporting Summary – BOA 12 #3
Name and Type of Well
 
BOA 12 #3, Step Out/Appraisal (Oil)
Well Location
 
Howard Co, Texas
Permit
 
S12, Block 33 T-2S, A-1353, TP RR Survey
TEX Working Interest
 
50%
Geological Rock Type
 
Permian to Mississippian Shales Carbonates
Depth of Zones Tested
 
app 2,800m – 3,000m
Type of Tests Undertaken
 
Flowback, post-fracture stimulation
Duration of Tests Undertaken
 
17 days
Hydrocarbon Phases Recovered
 
1,144 Barrels of Oil (34%) + 427mcf gas from 22 May
Other recovery
 
2,370 Barrels of Water (66%); app 6,800 barrels of load still water to recover
Choke Size Used
 
On Pump
Flow Rates
 
Average: 65 BOPD + 139 BWPD + 43 mcf (15-31 May 2014)
Number of Fracture Stimulations
 
Four stages
Material Volumes of Non-Hydrocarbon Gases
 
Nil
 
 
 
 
 
 

Table 5

1.3.3. Homar #1 (Target 50% WI)

A 5-stage fracture stimulation of the lower Wolfberry section was performed at Homar #1 on 8 July 2014. The program covered a 328 m interval, using approximately 17,300 barrels of load water. Flowback commenced on 9 July — the well has so far recovered approximately 52% of the load water (9,000 BW) with oil flow having commenced on 15 July 2014. Flow rates will be reported once levels have sufficiently stabilised.

1.3.4. BOA North #4 (Target 50% WI)

BOA North #4 is presently awaiting fracture-stimulation.

Forward Program

2014 Drilling Program

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

2. Current Indicative 2014 Drilling Schedule

 
   
 
 
 
 
 
 
 
 
 
 
 
Estimated
Timing*

 
Prospect
 
Location
 
Target
Working Interest (WI)

August 2014
 
BOA North #5
 
Howard Co, Tx
 
50%
Aug/Sep 2014
 
Bunbury #1
 
Howard Co, Tx
 
60%#
September 2014
 
Taree #1
 
Glasscock Co, Tx
 
60%#
Q4 2014
 
Ballarat #2
 
Glasscock Co, Tx
 
50%
Q4 2014
 
Darwin #4
 
Howard Co, Tx
 
50%

*Timing indicative only – actual order, timing and well selection will vary.
#Bunbury, Taree WI will reduce to 50% following Second Closing of sale to Aurora Energy Partners.

3. Production (1 Apr – 30 Jun)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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%
 
16.5  
2,380.6
 
4.1
 
595.1
 
480
 
91,385
 
120
 
22,846
E. Chalkley
 
35%
 
2.4
 
59.3
 
0.8
 
20.8
 
1,459
 
115,705
 
511
 
40,497
Merta
 
25%
 
10.8
 
407.1
 
2.7
 
101.8
 
144
 
5,250
 
36
 
1,312
Fairway+
 
35%-60%
 
45.5
 
204.7
 
26.0
 
121.6
 
23,703
 
116,297
 
13,011
 
68,567
Total
 
 
 
75.2
 
3,051.7
 
33.7
 
839.2
 
25,785
 
328,636
 
13,677
 
133,223
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net Production is scaled to Target’s Working Interest, before royalties; mmcf = million 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).

+ Net Oil and Gas Production reduced on 1 May 2014 to reflect 10% WI sale in relevant producing interests.

4. Lease Holdings

 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Project
 
Lease / Unit
 
Basin
 
Description
 
Depth Limits
 
TEX WI At 31 March 2014
 
TEX WI
At 30 June 2014
 
Royalty
 
Gross Acres
 
Net Acres
Fairway
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
 
BOA
 
Permian
 
S12, Block 33, T-2S, A-1353; TP RR Co Survey, Howard Co
 
None
 
60%
 
50%
 
25%
 
640.0
 
320.0
*
 
Darwin
 
Permian
 
S44, Block 33, T-1S, A-1292; TP RR Co Survey, Howard Co
 
None
 
60%
 
50%
 
25%
 
640.0
 
320.0
 
 
Bunbury
 
Permian
 
S102 A-1405; S103 A-1405; S104 A-1495; Bl 29 WNW RR Co, Howard Co
 
None
 
60%
 
60%
 
25%
 
918.0
 
550.8
*
 
Ballarat
 
Permian
 
S 184 185, Bl 28, A-815 A-A483; WNW RR Survey, Glasscock Co  
None
 
60%
 
50%
 
25%
 
355.7
 
177.8
 
 
Taree
 
Permian
 
S193, Bl 28, A-815 and A-A483; WNW RR Co Survey, Glasscock Co
 
None
 
60%
 
60%
 
25%
 
320.0
 
192.0
 
 
Sydney
 
Permian
 
S188 Block 29 A-170; WNW RR Co Survey, Glasscock Co
 
None
 
60%
 
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%
 
60%
 
25%
 
610.0
 
366.0
*
 
Homar
 
Permian
 
S24, Bl 35 A-1640; S26 Bl 35 A-1415; TP RR Co Survey, Howard Co
 
None
 
60%
 
50%
 
25%
 
260.0
 
130.0
*
 
Wagga Wagga
 
Permian
 
S221, Block 29, A-496; WNW RR Co Survey, Glasscock Co
 
None
 
45%
 
35%
 
25%
 
305.0
 
106.8
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%
 
25.7%
 
303.0
 
75.7
Section 28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SML #A-1, A-3 Unit
 
Gulf Coast
 
St Martin Ph
 
None
 
25%
 
25%
 
28%
 
40.0
 
10.0
 
 
SML #A-2 Unit
 
Gulf Coast
 
St Martin Ph
 
None
 
25%
 
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%
 
35%
 
30.5%
 
714.9
 
250.2
 
 
 * Changes effective 1 May 2014
 
 
 
 
 
Total  
5626
 
2797.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5. Corporate

5.1. Sale of 10% Interest in Fairway Project to Victory Energy

On 2 July 2014, Target Energy, through its wholly owned subsidiary TELA Garwood LP (“TELA Garwood”), confirmed the sale of a 10% working interest in its Fairway Project to Aurora Energy Partners (“Aurora”), a company associated with Victory Energy Corporation (OTCQX: VYEY).

A Purchase and Sale Agreement (“PSA”) was signed by TELA Garwood and Aurora on 30 June 2014, with an effective date of 1 May 2014. In response to external delays in completing conveyancing of titles, the PSA split the closing of the sale into two parts.

  • The first part (“First Closing”) was completed on 30 June 2014, with Aurora making an immediate payment of A$2.7m (US$2.5m) to TELA Garwood and in return TELA Garwood assigning to Aurora a 10% working interest in its Darwin, BOA and Wagga Wagga production leases and in various other leases.
  • Subject to the completion of the outstanding conveyancing items, the Second Closing is scheduled for 31 July 2014, at which time Aurora will pay the outstanding balance of A$3.5m (US$3.3m) to TELA Garwood and in return TELA Garwood will complete the balance of the assignments.
  • The total purchase price is A$6.2m (US$5.8m) after a reduction of US$0.2m in accordance with conditions of the sale.

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
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

Copyright © 2014 Marketwired. All Rights Reserved

The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group Inc. are solely responsible for the accuracy of such news releases.

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