Drilling of the initial well (COG#1H) has commenced and has now been completed. The intention was to drill down vertically for approximately 8,000 ft. It was expected that a determination would be made to either set casing to produce from the Buda Limestone, or to cement off the lower horizons and to drill horizontally into the lower Austin Chalk, or possibly both. As primary shows of both oil and gas were encountered the decision was made to come back up-hole and kick-off horizontally with a targeted 5000 foot lateral. As sufficient fractures were encountered, it was decided to terminate the lateral at approx 3000 feet, leaving some 1700 feet of further reserves available for later development. Starting 12 December 2017 a work-over rig was deployed onto the site to engage in the completion to production activities to the well.

The results of the Buda evaluation are that although good oil shows were encountered flowing for a continuous period and gas bubbles to surface, it was determined that in undertaking a full logging over the interval at TD 7825  and running Di-pole sonic, this would take time to work the data on transition between the Eagleford shale and Buda but that such time in terms of the rig economics would be better to cement off and prep for kickoff and horizontal drilling into the Austin Chalk, the major objective, which was implemented.

The Group has rights to develop a further seven new wells in the COGLA and has researched this possibility, as set out in the Competent Person’s Report.

The Group has adequate funds available to cover the expected cost of drilling the initial well. Drilling of any additional wells is subject to further funding, either by the Group obtaining adequate external funding or utilising the proceeds of the initial well to the extent it is successful during the relevant time-frame.

It is not the current intention of the Group to expand its operations to additional wells until early 2018.

We have permitting approval from both the RCC and the City of Gonzales to undertake the drilling of our next well in Q1 2018.