QUARTERLY ACTIVITIES REPORT
1 April 2018 – 30 June 2018
- Progression of investment in Tulainyo Project
- Expansion of interests in the Sacramento Basin by securing 100% ownership in Gasfields LLC and option to purchase XGas LLC
- Divestment of Botswana Assets
Update on Tulainyo Project
As announced to the market on 5 June 2017, the Company entered an agreement to invest in the Tulainyo Gas Discovery in the Sacramento Basin in California, United States of America. The Company signed an agreement with Gasfields LLC (Gasfields), Bombora Natural Energy Pty Ltd (Bombora) (a subsidiary of Pancontinental Oil & Gas NL (ASX:PCL)), and United Energy Royalties Pty Ltd, pursuant to which the Company had the opportunity to earn up to a 60% economic interest in Gasfields. Gasfields has the rights to farm-in to the Tulainyo Gas Discovery (Tulainyo Project), to earn up to 33.33% of that project. Subsequent to the reporting period and as discussed below in detail the Company has now secured 100% ownership in Gasfields.
The Tulainyo 2-7 well has been recently drilled as planned to a total depth of 5,710 feet (1740 m), within the large, over pressured anticlinal structure following extensive pre-planning. Post well analysis indicated multiple stacked sandstone units, varying as expected in thickness and quality, all gas saturated. For further details refer to the Company’s announcement dated 8 January 2018.
As previously announced to the market, a staged testing program of interpreted gas reservoirs in the Tulainyo 2-7 well is nearing completion. A range of potential gas reservoirs were identified in the well based on gas shows, drill and sample data and wireline logs from both the Tulainyo 2-7 and the nearby Tulainyo-1 well.
Figure 1: Surface Structure of the Sites Anticline
The operations at Tulainyo 2-7 were deliberately designed to evaluate the flow potential of shallow reservoirs observed in the original Tulainyo-1 discovery well and tied to outcrop. To date, the drilling activity has evaluated less than half of the potential stacked reservoir targets within closure, with up to 2,000 m of undrilled vertical closure mapped below the deepest zones encountered in the Tulainyo wells as drilled to date. Correlations to the outcrop in the adjacent range to the west indicate that the thickest reservoir sections are yet to be penetrated and may be present in this deeper, undrilled stratigraphic interval.
Tulainyo Gas Flow Test Program Commencing
ASX Announcement 22 February 2018
- Test equipment is on site at the Tulainyo Gas Discovery.
- Flow testing is expected to commence within the week.
- Two tests planned, involving multiple potential conventional sandstone gas reservoirs.
Raven Energy Limited (Raven or the Company) is pleased to provide an update to the market on operations at the Tulainyo Gas Discovery in the Sacramento Basin, California (Project). The Company is earning up to an effective 20% interest in the Project, via its investment in Gas Fields LLC (Gas Fields).
As advised to the market previously, the Tulainyo 2-7 well was drilled to the planned total depth of 5,710 feet (1,740 metres). This represented a significant engineering achievement by the Tulainyo Joint Venture, due to the challenging over–pressured geological conditions within the very large anticlinal structure. Post well analysis indicates multiple stacked sandstone units, varying as expected in thickness and quality, that are all gas saturated.
A two-stage test program will now be carried out with perforations into the selected reservoir intervals using Tubing Conveyed Perforating Equipment or TCPs. Testing will commence across a zone lower in the well with perforations across at least three separate sands with varying, interpreted reservoir quality. Once sufficient data has been captured from the first test, a removable bridge plug will be set to isolate the lower test zone and a second test will be conducted over a shallower, thicker sand package.
Overall the flow testing program is expected to take approximately one month to complete. Further information will be released to the market once there is clarity of the test results.
Commenting on the test program, John Begg of Gas Fields said:
“Our post- drill analysis indicated potential net gas pay of 56 metres (183 feet) from within a gross reservoir section of up to 118 metres (386 feet). We are now, after extensive engineering work and pre-planning, ready to flow test a representative suite of these sands.
The goal is to prove these sandstone reservoirs have sufficient quality to support commercial scale flows of natural gas. Gas Fields believes there is an excellent chance of achieving this objective across a two-stage test program”.
The Tulainyo Joint Venture includes operator California Resources Production Corporation (“CRPC”), a subsidiary of a NYSE-listed company that is one of California’s largest oil and gas production companies and Cirque Resources LP, a private company based in Denver, Colorado.
Quarterly Activities Report
1 October 2017 – 31 December 2017
ASX Announcement 19 February 2018
- Strategic placement conducted raising A$400,000 (before costs)
- Progression of investment in Gas Fields LLC and Tulainyo Project
- Divestment of Botswana Assets
- Continued evaluation of energy opportunities Raven Energy Limited (Raven or the Company) is pleased to provide its quarterly activities report for the quarter ending 31 December 2017.
Update on Tulainyo Project
As announced to the market on 5 June 2017, the Company entered an agreement to invest in the Tulainyo Gas Discovery in the Sacramento Basin in California, United States of America. The Company has signed an agreement with Gas Fields LLC (Gas Fields), Bombora Natural Energy Pty Ltd (a subsidiary of Pancontinental Oil & Gas NL), and United Energy Royalties Pty Ltd, pursuant to which the Company has the opportunity to earn up to a 60% economic interest in Gas Fields. Gas Fields has the rights to farm-in to the Tulainyo Gas Discovery (Tulainyo Project), to earn up to 33.33% of that project.
Throughout the quarter, the Ensign Rig 587 was mobilised to the drill site and in November, drilling of the Tulainyo 2-7 gas appraisal well commenced by the operator, and was completed in December, with drilling progressing to the planned total depth of 5,710 feet (1,737 metres).
Multiple, potential sandstone gas reservoirs were indicated based on interpretation of drill cuttings, gas shows and wireline log data. Gas Fields considers that the sands penetrated are as a good as expected pre drill. The Tulainyo Project operator ran seven inch production casing to protect the indicated gas zones for later testing.
A flow test program is expected to commence in early 2018 using a specialised testing rig and equipment currently being brought to the site.
For further details about the Tulainyo Project refer to the Company’s announcement on 5 June 2017.
Divestment of Botswana Assets
During the quarter the Company announced that it had entered into a conditional agreement (Conditional Agreement) with Acumen Energy Pty Ltd (Acumen) for the sale of its shareholding Rhino Energy (CBM) Pty Ltd (Rhino) that in turn holds Botswana prospecting licenses, (Transaction) PL 352/2008 and PL 353/2008 (Serowe Region Licenses), which are the subject of a farm-in agreement with Strata-X Energy Limited (SXA) and pursuant to which SXA has the ability to earn up to 75% of the project (Farm-in Agreement).
Completion of the Conditional Agreement was subject to a number of conditions, including SXA waiving its first right of refusal to acquire the Serowe Region Licenses, as provided for in the Farmin Agreement. During the quarter, the Company commenced discussions with SXA regarding whether SXA would exercise its right of pre-emption under the Farm-in Agreement.
Subsequent to the end of the quarter the Company announced that SXA had elected to exercise its rights of pre-emption under the Farm-in Agreement. Accordingly, the Company and SXA have agreed that the Company will sell its 25% shareholding in Rhino to SXA on the following terms (Transaction):
- SXA had to an immediate deposit of A$25,000 to the Company (which has since been received by the Company);
- upon completion of the sale and purchase agreement (SPA)(Completion), SXA will pay to the Company A$125,000 in cash and grant a 3.5% overriding royalty interest over the Serowe Region Licenses net to the Company’s 25% interest;
- within two months of Completion, SXA will pay to the Company a further A$200,000; and
- within four and a half months of Completion, SXA will pay to the Company a further A$200,000.
The Company looks forward to updating the market as the Transaction progresses.
On 10 November 2017, the Company announced that it had conducted a strategic placement and accepted an offer from Capital Investment Partners Pty Ltd (CIP) to raise up to A$400,000 (Strategic Placement). CIP is a Perth based broker which provides financing and advisory services to emerging natural resources and energy companies. 228,571,429 shares, priced at $0.00175 each and 228,571,429 attaching options (exercisable at $0.003 and expiring on 31 October 2020) were issued to sophisticated investors on 10 November 2020. The issue of these securities was conducted using the Company’s capacity under Listing Rule 7.1.
Funds raised under the Strategic Placement will be used for working capital purposes and further potential opportunities in the energy sector.
At the Company’s Annual General Meeting on 30 November 2017 (AGM), Mr Saxon Ball, a nonexecutive director of the Company did not seek re-election as a director and resigned from the board. The Company thanks Mr Ball for his contribution to the board and wishes Mr Ball the best with his future endeavours.
Change of Company Name
At the 2017 AGM, Shareholder approval was granted for the Company to change its name from “Magnum Gas and Power Limited” to “Raven Energy Limited” was granted at the Annual General Meeting.
Subsequent to the AGM the Company processed the change of name with the Australian Securities and Investments Commission. Accordingly, the Company is now trading as Raven Energy Limited with the ASX ticker code “REL”.
The Board continues to evaluate a number of prospects in line with its strategy of pursuing energy opportunities within both Australia and abroad.
Issue of Convertible Notes
ASX Announcement 19 February 2018
Raven Energy Limited (Raven or the Company) is pleased to announce that it has undertaken to issue convertible notes to raise up to A$2.2 million. Convertible notes will be issued to institutional and sophisticated investors on the following terms:
- Conversion price: $0.00176 per share
- One free attaching option ($0.003 exercise price, expiry 31 October 2020) for every two shares issued upon conversion
- Interest rate of 10% per annum, payable semi-annually via the issue of shares at the 5 trading day volume weighted average price prior to issue.
- Maturity: 12 months from the date of issue.
- Any conversion of the convertible notes will be subject to Raven shareholders first providing approval to the issue of Shares.
Nathan Featherby, Executive Chairman of the Company, will also seek shareholder approval to participate in the issue of the convertible notes, for up to A$250,000.
The funds raised following the issue of the convertible notes (intended to be this week) will be used for further works at the Tulainyo Gas Project in the Sacramento Basin in California, where flow testing of the Tulainyo 2-7 gas appraisal well is expected to commence in the near term. Remaining funds are proposed to be used for further identification and evaluation of energy and resources related acquisitions and for working capital purposes.
Further to the proposed financing, the Company intends to seek shareholder approval to undertake a consolidation of capital (consolidation) on the basis 1 share for every 16 shares held on the record date. Additional details on the proposed consolidation will be available in a Notice of Meeting expected to be distributed to shareholders prior to end of February 2018.
The Company requests that the suspension on its securities be lifted with immediate effect.
Tulainyo Gas Zones Evaluation Update
ASX Announcement 8 January 2018
- Post well evaluation indicates multiple potential gas pay zones.
- Gasfields interprets up to 56 metres (183 feet) of potential gas pay in sandstones.
- Planning for a critical flow test program is advanced.
Commenting on the project milestone, Gasfields LLC (Gasfields) representative John Begg said:
“We made an initial release of the well results when total depth had been reached and the zones of interest cased off and preserved for testing. Since then, evaluation of the well data, in particular the wireline logs, has progressed. We are now more confident that the entire section of interest is gas saturated and sandstone reservoirs of sufficient quality to support commercial scale flows of natural gas are present. We still need to prove this via flow testing and will have more to say about the test program once finalised.
From the outset we have viewed this as a potential play opening well. If we are successful with the test program, we have a real shot at proving up at Tulainyo what Gasfields believes has potential to be the largest new, conventional gas project in California in many years”.
Raven Energy (Raven or Company) is pleased to provide the following operations update for the Tulainyo 2-7 gas appraisal well in the Sacramento Gas Basin, California.
After drilling as planned to a total measured depth of 5,710 feet (1,740.4 metres) the Ensign Rig 587 was demobilised from site, the well cased and suspended and preparations are underway to return to site with a gas production testing unit.
Detailed analysis of the well data has been conducted for the primary section of interest within the Early Cretaceous Lodogo Formation. The analysis indicates multiple stacked sandstone units, varying as expected in thickness and quality, that are all gas saturated. The well encountered gross sandstone reservoir thicknesses of up to 118 metres (386 feet) with estimated, net gas pay of 56 metres (183 feet). Higher quality reservoir units exhibit porosities ranging from 15%-20%.
The Tulainyo project is located on the wests flank of the Sacramento Gas Basin approximately 120 km northeast of Sacramento. It is held under leases covering some 40,000 net acres (152 km²) positioned just 8 km from a major gas transport trunkline that supplies gas from Canada into the enormous California domestic gas market. California consumes on average some 7 Bcf of gas per day (2.6 TCF gas per year) and up to 11 Bcf of gas per day during peak periods. Gas prices attract a premium to the USA benchmark, Henry Hub pricing.
The Tulainyo joint venture includes operator California Resources Production Corporation, a subsidiary of a NYSE-listed company that is one of California’s largest oil and gas production companies and Cirque Resources LP, a private company based in Denver, Colorado.
Estimated Recoverable Gas Resource Potential
Raven’s interest is held by its 60% owned subsidiary Gasfields LLC. At completion of the farm-in earning program the Company will have an effective 20% interest across the project.
Resource estimates assume net beneficial interests at completion of farm-in earning wells and unrisked resources per the Company’s ASX release 22 June 2017.