Beacon Energy shares fell on Monday after the oil and gas exploration and production company with onshore assets in Germany released an update on the Schwarzbach 2(3.) lateral well in the Elfelden field.
The company has been unable to establish steady flow from the reservoir and the drilling rig has been removed. Investor disdain for this update was so great that Beacon Energy shares were down 78% at press time.
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The sidetrack well extended 85 meters from the original wellbore at a depth of 2,145 meters and was located approximately 9 meters from the original wellbore in the lower PBS formation.
After installing the production liner and electric submersible pump (ESP), the well started producing intermittently and experienced frequent stall issues, preventing a steady flow rate.
Initial data suggests bottomhole pressures and flow rates are lower than expected, indicating poor reservoir response. As a result, Beacon temporarily shut down the wellbore to allow the rig to be removed. During this time, the company will obtain pressure rise data to better analyze the performance of the reservoir.
“While we have safely excavated the SCHB-2 siding and installed the ESP, it is unfortunate that sustained flow rates have not yet been achieved. Initial response from Beacon Energy appears to be disappointing,” said Beacon Energy’s incoming CEO Stewart MacDonald.
“Once reconnected to the production facility, long-term stable flows will need to be established. We believe that Elverden is a material and potentially very valuable onshore oil discovery, We believe the recoverable reserves are 7.2mmbbl and we will now explore options to maximize the value of the discovered resources.”
