>Your thoughts would be appreciated. I am baffled !

Same here. Anyone that has been following the progress of the Warro-3 well in Australia knows that they had exactly the same problems. The man-made fractures connected to the natural water filled fractures, and they ended up with more water than gas. Here is the latest from Transerv:

Prior to the fracture stimulation of Warro 3, the presence of natural fractures in this part of the field was thought to be a positive feature that could assist the production of gas. The fracture stimulation of zone 1 was designed to tap into the natural fracture system observed in the well on logs. The testing campaign just completed has shown that rather than assisting gas production the natural fractures act as a conduit for water from shallower intervals.

Pursuant to the final technical review of Warro 3, the presence of these natural fractures that potentially yield water will be addressed in two ways in the planning and drilling of future appraisal wells. Firstly, large areas of the field appear unaffected by existing fault structures and the future evaluation work will now be focussed on these areas. This work is expected to comprise the acquisition of a 3D seismic survey in conjunction with further drilling. The 3D seismic data will provide a high fidelity image of the faulting in the field.

Secondly, many tight gas fields produce water along with the gas and handle this mix effectively through the appropriate completion design. The Warro 3 completion was not of this type but future wells will use the Warro 3 experience and ensure any water can be efficiently removed from the well, to not inhibit the gas flows achievable from the reservoir.

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So in the case of the Warro well, they knew the natural fractures were there, and fraced into them on purpose. What they didn't realize was that they were filled with water. So in the future, they will avoid the natural fractures by doing 3D seismic first in order to locate them. In Falcons case, they already did the 3D. So the question is, did they communicate with the natural fractures on purpose not knowing they were filled with water, or did they know the water was there, but the frac not go as planned.

The other big question is, why does Exxon not want to continue with the 3rd and 4th frac? My best guess is that they know the natural fractures were there, but didn't realize they were full of water. That same system might exist further up the hole, and they think that they are going to have the same problem, thus continuing with the 3rd and 4th frac would be a waste of money.

Which brings up another question. Why would Exxon care about wasting money unless they planned on sticking around for phase 2?

That's what I'm thinking, and that's why I see the latest news as just another delay, and nothing to loose any sleep over.