So, we are finally.... getting close to DLS providing actual flow rates for its long running Unconventional Gas program where it is partnered with BG (who has paid for most of the work to date).
BPT/ICN just put out another update, perhaps its second last one before we know whether Chevron will proceed with Stage 2 or not. If they do not, IMHO, it will be a major blow to BPT (not just because they won't get a further cash injection, but because that will most likely mean the end of the venture... in totality) whilst also being a negative to DLS to some extent, although fact that DLS/BG are continuing with their current program gives me more confidence that they will continue with it, albeit at a reduced pace to ensure capex does not run away.
Now, onto the results mentioned in the update. Both are relevant to DLS due to the geographic locations of the two most recent wells to be fracced and flow tested. Both have provided decent flow rates. What is more interesting is that BPT is clearly quite excited about the Etty-1 well which flowed most of its gas from just one formation, Toolachee. The size of the Patchawarra trough is big, that it would have sweet spots within it. Clearly this is one of them.
As you can see from the maps below, Etty-1 is very close to DLS acreage. It is also close to DLS current 4 well program with results due very soon (2 weeks by my estimates - but don't bet the house on that!).
Then you have Geoffy-1 which good flows from Patchawarra and Epsilon formations. Again, DLS acreage surrounds this well. The markets have almost 100% written off the Uncon gas in the Cooper Basin right now. With Gladstone and LNG about to kick in. I can only wait for the 'band wagon' - analysts etc etc to jump on in the next couple of months when the price of gas starts to shoot up.
The Cooper Players are still happy to be producing oil in the current market, unlike the vast majority of oil producers across the globe.
DLS has a busy second half to the financial year as well, unlike SXY... More western flank drilling, drilling on its Northern Wet gas projects plus bringing on more of the Flax wells. While its disappointing to see the SP so low, the stock for me, offers the best upside in any onshore producer. Its moat is strong with $170 million in cash, good management and great acreage. The rest is up to the geology gods and of course, the price of oil.
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