Australia: Armour Energy Finds Gas Shows While Drilling Lawn Shale in Egilabria 2

Armour Energy announced that the Egilabria 2 gas exploration well is at a current depth of 1791 metres in the main target Lawn Shale. Armour experienced nearly a three ‐ fold increase in the drilling rate of penetration to up to 150m / hour, and increased background gas as drilling commenced into the Lawn Shale at 1660 metres. The zone is indicating up to 16 units of gas while drilling, being heavily diluted with air rates required for air hammer drilling. The Lawn Shale intersected is dark and highly organic.

Gas peaks of 20 ‐ 115 units have been observed during frequent connection breaks, based on the increased rate of penetration, and short intermittent downtimes since entering the Lawn Shale. The well was shut ‐ in for an hour to test for gas build up, resulting in a 1100 unit gas show and a gas flare that burned approximately 3 to 4 metres long for approximately one minute. Armour has experienced significant gas influx at the interval of 1519 metres while tripping in and out of the drill hole. The strong gas show encountered at 1519 metres, in addition to the show reported earlier at 1098 metres, has produced flares up to 8 metres long during the drlling bit change trips out and back into the hole, of up to 4008 units. The gas was predominantly methane, and two samples have been taken for detailed gas analysis. Chip samples of the Lawn Shale returned to surface have been bleeding gas bubbles.

Currently Egilabria 2 is prognosing a thicker shale interval than encountered in Egilabria 1 drilled by Comalco in 1991, located 500 metres south west of Egilabria 2. Continued flows from intervals uphole indicate the Lawn Shale is sourcing potentially naturally fractured intervals of the Wide and Doomagee Sequences overlying the Lawn Supersequence. Armour will determine whether to individually test any segments of the Lawn Shale interval after completion of drilling through the interval to a revised total depth approximately 100 metres below the base of the Lawn Shale to allow logging and any potential testing.

Egilabria 2 is being drilled in Armour’s 100% owned exploration licence ATP1087, 350kms north of Mt Isa (see Figure 2). Armour has identified an independently certified prospective recoverable resource of 22 TCF of gas in the Lawn Shale within ATP 1087. An additional 18 TCF of conventional and unconventional targets have been identified by Armour in the overlying Carpentaria Basin and underlying Riversleigh Shale. The Company has recently entered a Heads of Agreement with APA to work towards transportation of up to 330 Petajoules a year of gas in the existing upgraded and future APA pipeline network to undersupplied coastal Queensland LNG and Sydney markets.

Armour holds 133,000 km 2 of granted licences and applications over North Queensland and the Northern Territory. The provincial holding covers four successive sedimentary basins, the Isa Superbasin, South Nicholson and parts of the Georgina and Carpentaria Basins in Queensland and the MacArthur Basin in the Northern Territory. In the Batten Trough, Macarthur Basin, Armour made the Glyde 1 discovery last year at flowing gas rates up to 3.3 million cubic feet per day.

Armour has also recently appointed Mr Robbert de Weijer as its CEO. The appointment brings Mr De Weijer’s considerable experience in oilfield exploration and development with Shell in the North Sea and Middle East and Arrow Energy’s CBM projects in Queensland to Armour’s exploration and future development projects.

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LNG World News Staff, July 4, 2013; Image: Armour Energy