Omega Oil and Gas Limited has successfully completed drilling and testing of its Canyon-1H horizontal well, revealing encouraging reservoir conditions that set the stage for upcoming fracture stimulation and flowback testing.
- Canyon-1H horizontal well drilling completed at 4,616m depth
- Diagnostic Fracture Injection Test (DFIT) confirms high reservoir overpressure and favorable properties
- Fracture stimulation and flowback testing scheduled for Q1 2025
- Appointment of experienced executives Peter Stickland and Milton Cooper
- Cash reserves stand at $14.7 million as of December 31, 2024
Successful Drilling Milestone
Omega Oil and Gas Limited (ASX: OMA) marked a significant operational milestone in the December 2024 quarter with the completion of the Canyon-1H horizontal appraisal well in Queensland’s Taroom Trough. The well reached a total depth of 4,616 meters, including 822 meters drilled horizontally within the target Canyon Sandstone reservoir. This well is notable as the deepest horizontal well drilled in the Taroom Trough and the first on its eastern side to be drilled without casing the build section.
During drilling, strong gas shows accompanied by fluorescence suggested the presence of condensate, reinforcing the prospectivity of the reservoir. The rig was released safely on 28 October 2024, concluding the drilling phase on schedule.
Encouraging DFIT Results
Following drilling, Omega conducted a Diagnostic Fracture Injection Test (DFIT) starting 21 December 2024, designed to assess key reservoir and geomechanical properties critical for planning hydraulic fracture stimulation. The DFIT results, announced in early January 2025, were highly encouraging. They confirmed a high reservoir overpressure of 0.79 psi/ft and favorable geomechanical stress conditions, both of which bode well for achieving commercial flow rates.
Higher overpressure typically translates into stronger and more sustained hydrocarbon flow, while lower geomechanical stress can reduce stimulation costs. Reservoir permeability aligned with expectations, further supporting the potential for a commercially viable development.
Next Steps: Fracture Stimulation and Testing
Building on these positive results, Omega is preparing to commence multi-stage hydraulic fracture stimulation and flowback testing of the Canyon-1H well, targeted for late February 2025. This program aims to validate whether the reservoir can deliver economic flow rates from the Canyon Sandstone, a critical step toward commercialisation of the resource.
Corporate Developments and Financial Position
Omega also strengthened its leadership team with the appointments of Peter Stickland as Non-Executive Director and Milton Cooper as Chief Commercial Officer. Both bring extensive upstream oil and gas experience, positioning the company well for the next phase of development and commercial engagement.
Financially, Omega ended the quarter with $14.7 million in cash reserves, supported by a $6.5 million capital raise completed in August-November 2024. Exploration expenditure for the Canyon-1H project totaled $4.3 million during the quarter, reflecting the company’s focused investment in advancing its core assets.
Outlook and Strategic Positioning
The successful drilling and DFIT testing of Canyon-1H significantly de-risks Omega’s Taroom Trough acreage, reinforcing the potential for a multi-trillion cubic feet (TCF) continuous gas resource. The upcoming fracture stimulation and flowback testing will be closely watched by investors and industry alike as a key indicator of commercial viability.
Meanwhile, operations at the Bennett Oil Field remain suspended pending further optimisation studies and potential farm-in partnerships, reflecting a prudent approach to capital allocation.
Bottom Line?
Omega’s next quarter will be pivotal as fracture stimulation results could unlock substantial value from the Taroom Trough.
Questions in the middle?
- Will the upcoming fracture stimulation confirm commercial flow rates from Canyon-1H?
- How will the new executive appointments influence Omega’s commercial strategy and partnerships?
- What is the timeline and certainty around the Research and Development Tax Incentive refund impacting cash flow?