Gulf Stream Energy has identified oil in two separate sandstone zones at its Zydeco project in Louisiana, although the result is based solely on wireline logs and has not yet been flow-tested. The well also retains access to the undrilled Upper Tweedle gas and condensate target.
- Oil indications in the Homeseeker B at 8,935 feet TVD
- Separate shallow Borsum Sand zone with 12 feet of net pay
- No flow testing, fluid samples or pressure data yet obtained
- 7-inch casing preserves access to the undrilled Upper Tweedle
- Zydeco-1 sidetrack reached 9,180 feet measured depth without reported HSE issues
Gulf Stream Energy Limited (ASX:GSE) has turned a technically difficult Louisiana well into a two-zone oil discovery, with wireline logs indicating hydrocarbons in both the primary Homeseeker B target and a much shallower Borsum Sand interval. The result gives the company two oil-bearing zones to evaluate, while leaving a deeper gas and condensate target accessible from the same wellbore.
Two oil-bearing sandstone zones identified
The Homeseeker B, encountered at 8,935 feet true vertical depth, delivered the central result of the Zydeco-1 sidetrack. Log interpretation indicated 5 feet of net pay, average pay porosity of 24% and average water saturation of 49%.
The separate Borsum Sand zone sits far higher in the well, at 3,364 feet true vertical depth. It showed 12 feet of net pay, average pay porosity of 32% and average water saturation of 43%. Gulf Stream said its shallow position means the Borsum can be evaluated separately from the deeper zones.
Log discoveries still require a commercial test
The important qualification is what the well did not produce: there has been no flow test, fluid sample, formation pressure measurement or mud-gas log. The oil discoveries are based on SLB wireline interpretation using resistivity, density, neutron, sonic and gamma-ray data. That is meaningful exploration evidence, but it does not yet establish flow rates, fluid properties, recoverable volumes or commercial viability.
The sidetrack reached 9,180 feet measured depth after the original Zydeco-1 hole was suspended with stuck pipe in August. Gulf Stream said drilling was completed without reported health, safety or environmental issues. Heavy-wall 7-inch casing was set about 378 feet above the Tweedle, preserving a possible route into the Upper Tweedle without drilling a new well.
Evaluation work becomes the next catalyst
Gulf Stream, which owns a 100% working interest in Zydeco and operates the project, said its immediate focus is to assess the two oil zones. A further announcement is expected to outline the proposed evaluation work. The company will consider the Upper Tweedle separately, and has not yet decided to drill or test that undrilled target.
For shareholders, the next data point matters more than the discovery label: pressure, samples, flow performance and an estimate of recoverable volumes will determine whether the log indications can support a development case. Until then, Zydeco has gained geological optionality, not production.
Bottom Line?
The discovery is positive exploration news, but the investment case now depends on whether testing converts log indications into flowing oil and commercially recoverable volumes.
Questions in the middle?
- Will formation testing confirm mobile oil and establish usable flow rates in either zone?
- What recoverable volumes and development costs will the company ultimately assign to the Homeseeker B and Borsum Sand?
- Will Gulf Stream seek Board and regulatory approval to drill and test the still-undrilled Upper Tweedle?