Stonehorse Faces Execution Risk as Drumheller Drilling Accelerates

New Wells Deliver Significant Production Boost

Stonehorse Energy Limited (ASX:SHE) has successfully tied in and commenced production from three new development wells in the Drumheller area of Alberta, Canada. Wells #2, #3, and #4 collectively contribute an additional 385 barrels of oil equivalent per day (BOEPD), with a robust 74% oil weighting. This recent production surge follows the earlier outperformance of Drumheller #1, which has now reached payout and continues to deliver above-plan output.

The individual well performances reveal a mix of oil, natural gas, and natural gas liquids (NGLs), with water cuts ranging from 55% to 80%. Well #2 leads with 172 BOEPD (125 barrels of oil per day), while wells #3 and #4 add 133 BOEPD and 78 BOEPD respectively. The combined production for Stonehorse Canada Corporation's Drumheller operations now exceeds 450 BOEPD, maintaining a strong focus on liquids-rich hydrocarbons.

Expansion Plans Reflect Confidence in Asset Potential

The operator is gearing up for a substantial drilling campaign, with over 80 potential new well locations identified in the Drumheller area. This positions Stonehorse to further expand its footprint and production profile later in the year, assuming current market conditions remain favourable. The company’s Executive Chairman, Rob Gardner, highlighted that the new wells not only increase production but also improve the oil weighting and netbacks, enhancing profitability for the Canadian business.

This development builds on a steady trajectory of growth, as Stonehorse had previously accelerated drilling after Drumheller #1 exceeded expectations early in 2026. The company's strategy of focusing on high-quality well bore assets with meaningful working interests continues to underpin its operational approach in North America.

Drumheller Wells Driving Operational Momentum

Stonehorse’s Canadian operations have demonstrated resilience and growth, with the Drumheller wells serving as a key driver. The recent production uplift complements the company’s earlier quarterly results, which featured solid revenue contributions from Canadian and US assets. Notably, the Drumheller #1 well’s early payout and sustained productivity have justified the increased development activity and capital deployment in the region.

Investors may recall that these wells were drilled under a four-well agreement, with Stonehorse holding approximately 35% working interest, reflecting a balanced risk and capital exposure. The operator’s readiness to pursue further drilling across numerous locations signals confidence in the reservoir’s potential and the economics of the development.

Stonehorse’s production growth is part of a broader pattern of operational progress, as evidenced in its steady operational and financial performance and the decision to accelerate drilling of wells #2, #3, and #4 following the success of Drumheller #1.