Sydney-based oil and gas producer AWE Energy saw its shares spike 8% on the Australian Securities Exchange (ASX) after delivering “outstanding” test results from its onshore Waitsia gas project in the Perth Basin, located about 367 km north of the Western Australia capital city of Perth.

The Waitsia field, a conventional gas play in the Kingia and High Cliff Sandstone formations, was discovered in 2014 during drilling operations at the Senecio-3 well. It is considered to be Australia’s largest conventional gas discovery for the last 40-years with the potential to supply the domestic market with 100 terajoules of gas per day for 10 years.

After releasing flow testing information from the AWE-operated Waitsia-3 appraisal well, AWE said the results had exceeded the producing Waitsia-1 well, "reflecting the considerable improvement in pay thickness and reservoir quality."

“This is another extremely positive result and demonstrates once more the outstanding conventional reservoir properties of the Waitsia field,” AWE Managing Director David Biggs said.

“This result also provides further confidence in the field deliverability as we move toward a final investment decision for stage 2 of the Waitsia gas project,” he said.

AWE shares closed AU3.5 cents higher at AU49 cents on the ASX after the company said the well had flowed gas at an instantaneous maximum rate of 50 million standard cubic feet per day and an average of 49.5 MMscf/d on an 80/64 in. choke at approximately 1,929 psig pressure over a period of 2.6 hours.

Waitsia-3 will be shut in for a brief pressure build-up survey before a series of flow tests at various choke settings, rates and well head pressures. AWE said it will then test the Waitsia-2 and Waitsia-4 wells and hopes to complete this before the end of November.

Last month AWE announced that development of the Waitsia gas field would not be impacted by the new Labor Government’s 12-month moratorium on hydraulic fracturing in the state of Western Australia pending a scientific inquiry into hydraulic stimulation.

AWE said Waitsia stage 1 began producing in August last year from a conventional reservoir and no hydraulic fracturing was subsequently required for Waitsia stage 2.

AWE’s 50% partner in the L1/L2 licence in the Perth Basin is Origin Energy subsidiary Lattice Energy, which was recently acquired by Adelaide-based Beach Energy for US$1.25 billion in a deal which transformed the company into a major Australian gas player, adding significant offshore and overseas producing assets to its previously central Cooper Basin position.

Once the Lattice Energy deal is completed, Origin’s share of the Perth Basin assets will be transferred to Beach Energy, which counts media company Seven Group Holdings, with a 22.73% stake, as a major shareholder.

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