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sugarloaf update

  1. 1,059 Posts.
    11 July 2007
    Company Announcements Platform
    Australian Stock Exchange Limited
    Exchange Centre
    20 Bond Street
    SYDNEY NSW 2000
    Via ASX Online
    Sugarloaf-1 Well
    The rig required to undertake remedial cementation and formation testing has arrived on
    site. Remedial cementation operations will start immediately and could take up to three
    weeks to complete. This will be followed by fracture stimulation and flow testing of each
    of the three zones of possible gas pay, identified from wire-line logs and gas shows in
    carbonate rocks of Cretaceous age.
    For engineering reasons the deepest zone will be tested first. Should any of the zones of
    interest produce hydrocarbons at commercial rates, it is likely that the zone would be
    placed on long term production test to assess reservoir performance.
    Sugarkane Gas Field
    The upper zone of possible gas pay in the Sugarloaf-1 well is believed to correlate with
    the producing zone in a competitor company’s new field discovery well, located 6.6
    kilometres west of the Sugarloaf-1 well. The new discovery is known as the Sugarkane Gas
    Field (“Sugarkane Field”). Adelphi has no interest in the discovery well or the lease
    holdings immediately surrounding that well. Details of the discovery are not available but
    the well is vertical and is believed to have been producing gas and condensate
    continuously for more than eight months.
    Although the upper zone of possible pay in the Sugarloaf-1 well has not yet been flow
    tested, on wire-line log, gas log and regional seismic interpretation grounds, the upper
    zone in Sugarloaf-1 appears to be within the Sugarkane Field.
    Study of regional seismic and well information by Texas Crude Energy Inc. (“TCEI” –
    operator of the Sugarloaf Joint Venture) suggests the Sugarkane Field is extensive and, as
    recently announced, the Sugarloaf Joint Venture has now secured a total of around
    20,000 acres of leases (of which Adelphi has a 20% interest) which cover portion of the
    interpreted eastern extension of the Sugarkane Field. These leases provide rights to all
    depths. The leasing of the Sugarloaf acreage was carried out in competition with several
    USA oil and gas companies, including at least one major oil company.
    Proposed Sugarloaf-2 Well
    As leasing of acreage is now essentially complete, the Sugarloaf Project Operator (TCEI)
    has proposed the drilling of a second well, located about 1.6 kilometres from the
    Sugarloaf-1 well.
    The well is an exploration well and is proposed to be drilled vertically to just above the
    target and then horizontally for 5,000 feet (1,524 metres) in the target upper zone of
    possible gas pay defined in Sugarloaf-1. As already mentioned, this is the zone which is
    believed to correlate with the producing section in the Sugarkane Field discovery well.
    Horizontal drilling has been selected, as successful horizontal wells commonly produce at
    rates several times that of a vertical well at the same point in the reservoir.
    A suitable rig has been identified and subject to Joint Venture approval and execution
    of relevant documentation, is expected on location about the end of August. Adelphi’s
    20% share of dry hole costs are approximately US$720,000 based on a gross estimated
    dry hole cost of US$3.6 million for this well. Total well completion costs are estimated at
    US$1.65 million (Adelphi share US$330,000).
    Adelphi has a 20% working interest in the Sugarloaf Project through its wholly-owned US
    subsidiary Adelphi Energy Texas, Inc.
    For further information please contact Alex Forcke on 08-9263 4600 or
    [email protected]
    Yours faithfully
    Executive Chairman
    Adelphi Energy Limited
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