Falcon Logs Deep Well in Hungary, Runs Casing

Falcon Oil and Gas Ltd.

Falcon Oil and Gas Ltd. has issued an operational update on its Mako-6 well in Hungary.

Mako-6 well has reached total depth (TD) at a 5,692-m measured depth, and 5 1/2-inch casing has been set in preparation for testing of multiple zones. As the company announced in May, the well had already drilled a 900-m gross sequence of the Szolnok Formation with overpressured gas shows and a net-to-gross ratio of approximately 60%.

The Endrod Formation was expected to be present below the Szolnok Formation, as determined by prior drilling in the historic Hod-1 and Mako-1, -2, and -3 wells. The Endrod Formation was indeed encountered at 4,388 m with a sharp increase in both pressure and gas shows as evidenced by the mud log. Falcon management elected to continue drilling at the base of the Endrod (5,075 m) to explore and investigate the possibility of coarse-grained clastic sediments in the bottom of the basin. Such potential reservoir-grade sediments might be associated with early post-rift and syn-rift deposition, if present. This deeper target has never been drilled in the Mako Trough.

Based on well information and seismic surveys, the Endrod has now been stratigraphically subdivided into an Upper and Lower member. The Upper Endrod (4,388 m to 4,735 m) consists of shale and marl with thin, fine-grained, sandstone turbidites. This unit appears to be highly overpressured and gas-charged. The sediments are organic-rich and represent part of the hydrocarbon-generating portion of the Endrod. As Falcon noted on May 18, mud weights had to be increased to more than 16 pounds per gallon; gas evolving from these tight gas sands had to be flared to control the well.

The Lower Endrod (4,735 m to 5,075 m) continued with a 340-m sequence of organic-rich marl and shale. Significant gas shows and apparent high-pressures persisted. Fine-grained sandstone turbidites were largely absent, but instead two 20-m and 50-m sandstone/conglomerate sequences occurred in discrete, thick intervals. These intra-Endrod conglomeratic units show indications of permeability on the logs evidenced by mud-cake and invasion profiles. Well logs also indicate gas with no movable water.

The Upper and Lower Endrod are seismically distinctive and can be mapped over 1.000 square km across the Mako Trough. The presence of the gas cell is believed to be pervasive throughout this area in accordance with Falcon's basin-centered-gas model.

The apparent high net-to-gross, coarse-grained sediments encountered below the Endrod have been divided by Falcon into two zones based on both log character and clear seismic definition. The upper zone is called the Basal Conglomerate, which is likely deposited during early post-rift times. The lower zone is called the Syn-rift Conglomerate. It is probably associated with the early rifting phase at the time when the Mako Trough was being formed.

The Basal Conglomerate (5,075 m to 5,348 m) consists of a very thick, 270-m or more, coarsening-upward sequence of shale, sandstones, and conglomerates. These sediments exhibited similar high pressures and gas shows previously encountered within the Endrod. Well log analyses predict gas presence with no apparent movable water. Initial log interpretation, strong mud cake build-up, and invasion profiles indicate good permeability and porosity, which, however, must be confirmed by flow testing. Strong seismic reflectors associated with this zone can be mapped over 500 square km, covering much of the central part of the Mako Trough.

The underlying Syn-rift Conglomerate (5,348 m to TD at 5,692 m) is a 350-m sequence of coarse conglomerates for which well log analyses indicate the presence of gas with no movable water. Initial analyses show these units to be of low porosity; however, strong mud cake build-up and invasion profiles in this zone may be indicative of permeability. These syn-rift conglomerates have a complicated distribution across the Mako Trough with thickness varying with deep structural control, so reservoir prediction is not possible at this stage.

The well was terminated at 5,692 m after recovering a core, which showed that the well was still in the syn-rift section. Although strong gas shows were continuing, Falcon management considered it operationally prudent to not expose the very large section of open-hole, gas-bearing section (approximately 1,400 m) to more drilling. The well has been cased and will enter multiple flow test phases upon arrival of a suitable rig.

Falcon Oil & Gas Ltd. is a British Columbia corporation that is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly owned subsidiary TXM Oil and Gas Exploration and in Romania through its wholly-owned subsidiary JVX Energy Corp.