Empire Completes Testing Program at RGN-1 Well in WA's Permit EP 389

Perth Basin domestic gas producer Empire Oil & Gas NL provided Tuesday the following update for the completion and testing program currently underway at its 100 percent owned Red Gully North-1 (RGN-1) discovery in permit EP 389 in Western Australia.

Progress

Since the last report April 19, the Upper D sand 48 hour pressure build-up was completed and the gauges were recovered from the well for analysis.

Subsequently, nitrogen was used to provide a 4,000 pound per square inch (psi) drawdown on the Lower D sand interval in an attempt to induce flow from the reservoir. The Lower D sand interval did not flow gas or fluid to surface over a 14 hour period. The down-hole pressure gauges were recovered and clearly indicate that a very low permeability (tight) sandstone interval was tested, which is unable to flow sufficient gas and condensate to be commercial.

The testing program was completed and the well is being prepared for temporary suspension. The completion and testing equipment is currently being demobilized.

Cattamarra C and Upper D Test Results

The earlier recovery of gas and condensate from the Cattamarra C and Upper D intervals remain encouraging. The Cattamarra C and Upper D intervals are estimated to contain 7.5 petajoules (PJ) of contingent gas resources which could be converted to reserves. This would enable the commercialization of the well by tie back to the existing Red Gully Production facility. The high condensate gas ratio also provides additional upside in the case that a commercial flow is established.

Work is underway to remedy the source of the formation water which compromised hydrocarbon production during the previous tests. This work has identified a high porosity water bearing sand above the C sand with the potential to flow high rates of water if not effectively isolated, which is interpreted to be the case. The best method to shut-off water flow from this zone is now being planned. A number of options are being evaluated, all of which are standard practice in the industry and are considered to have a good chance of success. A final decision on the best course of action will be taken within the next month, based on equipment availability and the cost required to complete the work.

Empire CEO Ken Aitken said:

"The completion and test program over the last month has confirmed moveable hydrocarbons from 2 out of 3 zones in the RGN-1 well. Following the unsuccessful flow test of the Lower D interval, we can now focus our efforts on the best technical and operational means to effectively isolate and re-test the C and Upper D sand intervals."

Background

Following successful drilling operations, RGN-1 was suspended Dec. 29, 2015. RGN-1 is located in EP 389, approximately 2.5 miles (4 kilometers) to the north of the Empire's 100 percent owned Red Gully Processing Facility.

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