Armour Energy Provides Update on its Field Assets in Northern Australia

Armour Energy Limited, an exploration and development company, provided Tuesday an update on its field assets in northern Australia.

Egilabria 2 Well Clean Up

The Board of Directors of Armour Energy (Armour or the Company) is pleased to advise that operations to further test the Egilabria 2 well in ATP1087 continue to progress favorably. The well is flowing back stimulation fluids via the recently installed PCP pump faster than initially projected, indicating stronger than expected permeability in the successfully hydraulically stimulated zone of the Lawn Shale Formation. A total of just over 50 percent of the stimulation fluid has now been recovered and, at current flow‐back rates, 60 percent recovery will be reached by the end of the month.

Following removal of the majority of stimulation fluids the well is expected to start flowing dry gas from the successfully hydraulically stimulated zone. It is encouraging to note that pressure is starting to build up on the gas side (the annulus) of the well completion. Prior to commencement of recent pumping activities, the gas pressure at surface was up to 160 psi. The removal of fluid and reduction in hydrostatic pressure on the reservoir as a result of the pumping activities is expected to facilitate gas flows.

Results from this test are aimed to further support the concept that gas can be produced at commercial rates from the Lawn Shale Formation. So far ATP1087 results have included world class Total Organic Carbon of up to 11 percent, high methane, helium and very low CO2 contents, and seismically defined deep shale fairways in both the Lawn Shale and Riversleigh Shale. Maiden shale gas contingent resources have been certified within ATP1087 of 364 billion cubic feet or Bcf (3C); 154 Bcf (2C); 33 Bcf (1C), as reported as at July 16.

Deferral of Northern Territory Survey Work Program

The Board has decided to defer the Company’s regional 2D seismic survey in the MacArthur Basin to mid‐2015. The advantages of deferring the survey include an ability to expand the program to include EP193, assuming its grant in the meantime, and elimination of any risk that seismic activities need to be curtailed due to onset of the wet season. Geological analysis of the basin has indicated that the seismic target area, including EP193, potentially contains a number of large depo‐centres highly prospective for oil and gas.

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