Neon Energy (ASX: NEN) is a petroleum exploration and production company, headquartered in Perth and with oil and gas interests in Vietnam and California.
NEN holds material operated interests in the Block 120 and 105 exploration blocks, offshore Vietnam, and a portfolio of operated exploration, appraisal and production assets onshore California, including 100% ownership of the producing North San Ardo oil field.
Neon Energy (ASX: NEN) has penned in a best case contingent recoverable resource of 26 million barrels of oil and 22 billion cubic feet of gas for its Paloma project in California.
This follows the company flowed 1.9 million cubic feet of gas and 226 barrels of light oil per day unassisted from the Fruitvale and Lower Stevens B formations during production testing of its Paloma Deep-1 well.
However, the test was interrupted due to the plugging of the testing tools by packer debris, brought on by formation damage caused by testing.
Neon is now testing the Lower Antelope Shale with pump-assisted rates ranging from 20 to 200 barrels of fluid per day, and oil cut ranging from 10% to 20%.
Testing of this zone will continue until enough data is gathered to fully understand the commercial potential of the shale.
Additional shallower zones of interest still remain to be tested in the well, including the Paloma Sandstones and the Upper Antelope Formation. These zones are not included in the current contingent resource calculations and may represent potential upside.
Meanwhile, drilling of the Paloma Deep-2 appraisal is progressing on schedule. This well is designed to confirm the reservoir characteristics and areal extent of productive zones encountered in the discovery well.
Paloma Deep-2 is being drilled with a larger diameter borehole than Paloma Deep-1 and will be completed with cemented liner to achieve optimal flow test results.
Neon has also completed the shallow Paloma-3 exploration well on the western portion of the leased acreage.
This targets shallow zones that could not be tested in the two deeper wells and production testing of thin gas sands within the Etchegoin Sandstone Formation is expected to begin soon.
Neon has a 75% stake in the project while Solimar Energy (ASX: SGY) holds 25%.
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