Tuesday, April 30, 2019

More TMS Results

Australian penny stock operator, Australis Oil, released their latest TMS well results.  They're currently "2 for 4" on an operational basis.  When Encana sold their TMS acreage package, the TMSers all had hoped for a proven, financially-strong unconventional operator to be the buyer.  For now, we can be excited about two of their completions.  The Stewart 30H-1 continues to produce at a good rate after an initial potential of 1458 boepd on a 6850' lateral.  The latest well, the Taylor 27H-1, had an initial potential of 1386 boepd from a 6798' lateral and 20 stages.  Surprisingly, Australis is using a 2014 completion design mimicking what Encana last used in 2014.  It will be interesting to see future results hopefully utilizing a 2019 frac design.  With a $65 million "success contingent" Macquarie Bank debt facility, it will be interesting to see how Macquarie participates in the future if additional mechanical challenges occur in upcoming wells.  

The 1st map below illustrates the Australis well locations with respect to the LAMS Stack Play.  The 2nd map is a base map for the two cross sections that follow.  The labels on the map depict an isopach of feet of DLogR greater than 0.9.  DLogR represents a log-calculated TOC value (Passey Method).  The map and cross sections illustrate that Australis' current focus area is thinner than that in the core of the TMS play.  I define the "core" as the thickest accumulation of TMS source rock.  Note that public companies typically use the term "core" to define the area surrounding their leases.....funny the way it is.

It will be interesting to see EOG and ConocoPhillips drill TMS wells in the future where the source rock is almost twice as thick in places relative to the Australis focus area.  More interesting is that EOG's current lease position lays down very well with the TMS DLogR isopach map.  Maybe we'll see a TMS well in 2020 from them.  Prove the Austin Chalk first and then the "stack" potential second.  That's an excellent and optimistic strategy.

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