Talundilly Prospect Summary

The technical elements for success in developing coal seam gas resources are coal quality, depth to coal, net coal and gas shale thickness, gas content and saturation, and coal permeability. The Talundilly project exhibits excellent attributes in the following key metrics.

Independent Resource Report

In May 2011, MHA Petroleum Consultants completed their resource report for Talundilly Coal Seam Gas Prospect. Access the report here.

The Coal Zone

Coal Quality

The coals in Talundilly-1 possess similarly vitrinite-rich dull coals as the Coal Seam Gas (CSG ) productive Walloon coals of the Surat Basin.

Analyses of exploration reports from a number of different well locations suggest a good quality, low rank coal across the ATP 862 and ATP 864 permit areas. A wide range of results from unwashed and washed coal ply samples indicate the heterogeneous rock types (in terms of carbon content) across the analyzed coal zone. These range from high grade coal to low grade coal, and coaly mudstone. Such a range is widely observed in coal seams. However, all of these carbonbearing rocks in the coal zone are expected to hold natural gas in proportion to their carbon content when encountered at depth during drilling.

Depth to Coal

The Talundilly coal zone is situated at the optimal depth for coal seam gas development. Optimal depth of the coal deposit is between 300 and 3,000 feet. Coals above 300 feet typically have little gas left and what gas is there is at low pressures so gas flow is below commercial levels. Below 3000 feet, the plastic nature of coals typically reduces cleat permeability and again gas flow rates fall to below commercial levels. A slow seismic response characteristic can be used to map the coal zone throughout Sentry’s ATP 862 and 864. The 600 feet (200m) depth to the coal on the seismic section is that measured directly in the Talundilly-1 well. The flat lying coal zone would be relatively straight forward to develop.

Depth to Coal

Net Coal and Gas Shale Thickness

The thickest coal and gas shale section in the region is located within ATP 862 and ATP 864. Utilizing mudlog, sonic, and resistivity analysis of the Talundilly-1 well log (with a sonic cut off at >130μs/ft, GR of < 50 and resistivity peaks) our interpretation concludes with net coal ranging from 13.6 to 60 meters depending on stringency of cutoffs. The net gas shale is interpreted to be 65 to 135 meters.

Gas Shale Thickness

Coal Gas Content and Saturation

At Talundilly-1 and Isis Downs-1 the gas kick associated with the coal zones remains high across the entire coal zone which is filled with coal seams, muddy coal and carbonaceous mudrocks. The elevated gas readings while drilling in the mudrock sections suggests that the entire section is gassy and that the

Carbonaceous rocks associated with the coal seams themselves should be considered in the appraisal. The gassy non-coal lithologies include the leaner varieties of carbonaceous shale, mudstone, siltstone and claystone as well as the carbon-rich coaly mudstone (taken at a density range of 2.0 to 2.2 g/cc).

Gas content of the gassy mudrocks in the Winton coal zone was estimate using Leco total organic carbon (TOC ) analysis of samples in Talundilly 1 and an East Energy coal mine sample. Within the coal zone at 650 and 850 feet, the gassy mudrocks appear to have a gas storage capacity of about 0.6 m3/tonne. The burial history indicates that the Winton coals should be gas-bearing and when drilled this gas would be released in the mud stream. Talundilly-1 and Isis Downs-1 have high quality mud gas logs that when interpreted in conjunction with the cuttings log indicate coals and carbonaceous mudrocks are gassy.

In Talundilly-1 there is a strong association between an increased mud gas response with the coal zone, formed by seams and carbonaceous mudrocks. Further,  gas show of 60,000 ppm associated with interbedded sandstone and coal suggests that the coals are at least locally saturated with gas to the point where they appear to have charged the adjacent sandstone. In Isis Downs-1, gas shows are produced

by a 2.1 g/cc carbonaceous mudstone starting at 490 feet and a thin coal at about 590 feet. The thicker coal seams and carbonaceous mudstone at 720–790 feet also appears to have an associated gas show.

Coal Permeability

Winton coal core shows two cm between cleat indicating good fracture permeability potential. Cleat reduces size of matrix blocks increasing desorption rate. Across the ATP area, seismic data shows multiple faulting which lead to fracturing of coal enhancing porosity and permeability.

Coal Permeability