Queensland Pacific Metals - Update on Gas Production Wells - 27 September 2024
QUEENSLAND PACIFIC METALS LIMITED (QPM) Share Update September 2024 Thursday 26th
Queensland Pacific Metals Announces Positive Progress on New Gas Production Wells
Queensland Pacific Metals Ltd (ASX: QPM) has provided an update on its 7-well drilling program at Teviot Brook South, highlighting significant progress and early positive results.
Instant Summary:
- Drilling program on schedule with all vertical and 5 of the 7 lateral wells completed.
- Over 8,800 meters of in-seam drilling successfully completed.
- 2 wells in production with 3 more to be completed by the end of October.
- Encouraging early gas flows from the first two wells within days of pumping commencement.
- Drilling program fully funded under Dyno Nobel Development Funding Facility.
Drilling Program Update
The drilling program consists of 7 new Surface to Inseam (SIS) well pairs located in the Teviot Brook South region of PL191. These wells target the Goonyella Middle Seam. The program is on track to be completed by November. Currently, all vertical wells and 5 of the lateral wells have been completed, with the drill rig now working on the 6th lateral (TB121L1).
The table below shows the status of each well:
- GM181: Producing - 52 days on pump
- GM182: Drilling complete
- GM191: Drilling complete
- GM192: Producing - 14 days on pump
- GM193: Vertical drilled
- M141: Vertical drilled - lateral currently drilling
Production Update
Both GM181 and GM191 began flowing gas within days of the commencement of water pumping operations and are showing encouraging gas flow and pressure trends. There has been clear evidence of communication between the newly drilled laterals and existing wells, particularly with GM191, which has led to increased production from intersected wells M069 and M070.
These early results suggest that the new wells are accessing undrained areas of the field and are effectively communicating with existing production wells, creating a large subsurface drainage network.
Funding Update
The drilling program is fully funded under the $80 million Development Funding Facility provided by Dyno Nobel. Additionally, QPME and Incitec Pivot Limited (IPL) have amended their Corporate Guarantee Facility Agreement to allow QPME the flexibility to fund up to $30 million of fixed charges relating to the existing NQGP and TPS contracts. Any funds provided under this facility will be repaid over an extended period post 1 April 2026.
QPME has also announced newly agreed commercial terms for the NQGP and TPS, which will come into effect around 1 July 2025 and are expected to significantly improve MGP’s operating performance.
The positive progress in the drilling program and the early encouraging gas flows are likely to boost investor confidence in Queensland Pacific Metals. The fully funded drilling program and the amended Corporate Guarantee Facility Agreement further strengthen the company's financial position. These developments are expected to positively impact QPM's stock price as investors react to the promising production growth trends.
Investor Reaction:
Analysts are likely to react positively to the news, given the encouraging early gas flows and the company's strong financial backing. The progress in the drilling program and the flexibility provided by the amended Corporate Guarantee Facility Agreement are seen as significant positives for QPM's future production capabilities and financial stability.
Conclusion:
Investors should keep an eye on the completion of the remaining wells and the continued production trends. The positive early results and strong financial backing position Queensland Pacific Metals well for future growth. Investors are encouraged to monitor further updates from the company as the drilling program progresses.