RBC Capital Markets' Ben Wilson said the fact that the well flowed at an average flow of 1.1 million cubic feet per day, with no decline over the full 57 days, was extremely encouraging for other oilers targeting the mid-Velkerri Shale.

 

The well, part of a multi-million dollar farm-in agreement between Origin Energy (35%), Falcon Oil & Gas (30%) and Sasol (35%) was subjected to one of Schlumberger's largest frac jobs ever in Australia.

 

Origin spent up big at Amungee, underpinning its belief in the Beetaloo Basin and its decision to retain the asset in the parent company rather than bundling it in its proposed spin-off.

 

"The well result is strong particularly given that we understand the well mechanical issues meant that production from all fracced zones in the horizontal section was not possible," Wilson said.

 

It is understood Origin and its partners had difficulty drilling through the plugs. 

 

Wilson said that the investment was a show of faith in the long-overlooked region, where Falcon has been exploring for more than a decade.

 

The fact that Santos has also retained its Beetaloo Basin position within its core asset portfolio rather than group it with other peripheral assets after drilling the Tanumbrini-1 well to the east in 2015 also spoke to the geological attractiveness.

 

While stressing it is still early days for the Beetaloo Basin, Wilson considers it highly prospective basin due to thickness of shale packages, aerial extent of the basin, over-pressuring, good liquids content, and its marine depositional setting rather than lacustrine formations.

 

There is already a pipeline to the McArthur River lead-zinc-silver mine to the east, and Jemena's Northern Gas Pipeline will be sending gas into the east coast market from 2018.

 

The frac job was the last of the wells approved before the NT moratorium was put in place by the new NT Labor government, and it is likely to be more than year before any further frac applications can be process. 

 

"The current fraccing moratorium is, of course, the sizeable elephant in the room, although we think that over time the moratorium will be diluted to preclude fraccing around residential areas and other areas of significance [for example, Uluru], allowing fraccing to resume in the Beetaloo and McArthur basins," Wilson said. 

 

EDIT: This article has been updated to reflect that Schlumberger, not Halliburton, was responsible for the fracture stimulation of the mungee NW-1H well.