http://www.stockopedia.co.uk/comment/view/32356/re-falcon-oil-gas

In reply to djpreston (post #23)

I was a bit rushed before and intended to write a little bit more based on the original release and - interestingly in the light of your link above - it seems to have disappeared?

Anyway, here it is on PR Newswire and here are my (intended to be) dispassionate thoughts.

I think the important elements include

For both fracture stimulation tests, the water flowed back was very fresh, less than 5,000 parts per million (ppm) of total dissolved solids

...which suggests that there was no 'contamination' by hydrocarbons and thus that the water was coming from a source unrelated to the gas. This seems to be confirmed by the statement that it

is possible that the matrix Szolnok Formation remains largely untested due to preferential flow from the natural fractures.

In other words, communication with the water-bearing zones is immensely better than communication with the gas-bearing zones above. What we don't know is whether this communication occurs naturally or whether the frac has preferentially opened-up these avenues.

I very much suspect the latter, with the fracs propogating partly downwards rather than radially. In any event, once one of these fractures has communication with (or 'touches,' if you prefer) the water zone then the water can move faster and therefore preferentially into the well compared to the gas which still has to find its way out of the tight pore spaces first.

Testing will have started at the bottom, and Falcon go on to say that they interpret

the intervals above the tested section to be a separate reservoir and a potential sweet spot within the Szolnok Formation.

Adding to the positive-sounding tone, they go on to say

Core data indicates that the permeability of these prospective intervals is considerably higher than permeability measured below. Additionally, net to gross reservoir quality sand is also much higher and logs indicate that the gas saturation may increase upwards through the Szolnok Formation.

OK, then. And just before you can say "well, perhaps they would say that, wouldn't they?" the release quickly mentions that

Pressure in these prospective intervals of the Szolnok Formation is interpreted to be considerably lower than the pressures encountered deeper.

I think they have their work cut out now. They're saying that

Falcon is currently evaluating the remainder of the Szolnok Formation to determine if it is possible to move away from this potential natural fracture system.

...and my question would be; did they know about these natural fractures before? I don't recall reading about them, and so how do they expect to track them now? If they did know, was this ever presented as a risk?

As to the MOL spokesperson saying

We consider Falcon's announcement premature since the testing of the Foldeak-1 well and the evaluation of the test results are ongoing

I don't know if that's really very much different from FO has said, is it?

SW10