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Gas explorer Galilee Energy (ASX:GLL) has been provided with the go-ahead to spud Zydeco-1, after recently acquired 3D seismic data confirmed the optimal bottom-hole location for the Louisiana well.
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On the back of a recent $6.5M capital raise, Galilee is chasing up to eight billion cubic feet (bcf) of gas and half a million barrels of condensate in a high price market.
The appraisal/production well is expected to spud this quarter, with the current West Texas Intermediate (WTI) crude price of around US$90 per barrel, which should be a pretty major boost for project economics.
Galilee’s MD, Joseph Graham, said the receipt of this seismic interpretation has materially strengthened the technical understanding of the Zydeco structure.
“Moreover, the seismic data supports the presence of extensive sand development across both Tweedel formations and confirms the technical work completed to date. This is another important milestone to complete in order to narrow the timeline to commencing drilling at the Zydeco gas project,” he explained.
Zydeco also benefits from its proximity to nearby production at Indigo and Frey, with a one-mile gas spur line to the Texas gas pipeline providing a rapid commercialisation opportunity.
A simple, low-cost development concept allows for the targeting of production within months of a successful flow at Zydeco-1.
“With infrastructure in place, strong local technical partnerships secured and funding completed, Galilee is now positioned to execute its first U.S. drilling program targeting meaningful gas and condensate volumes with a clear path to commercialisation and capitalise high WTI oil prices,” Mr Graham explained.
Zydeco-1 represents the company’s first U.S. Gulf Coast catalyst. The well will test a historically discovered but never actually produced gas-condensate structure. Success would establish immediate production and cash flow and a scalable platform for follow-up drilling and regional expansion.
GLL is up +1.83%, to $1.67. Mkt cap $444.4M.
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