Galilee Energy Limited (ASX: GLL) ('Galilee') is pleased to provide an update on the Glenaras multilateral pilot programme ('Pilot') in the Galilee Basin in Queensland.

The Pilot is part of the Glenaras Gas Project ('Project') located in ATP 2019, which is 100% owned and operated by Galilee. The Permit covers an area of approximately 4000 km2

The Project has one of the largest Contingent Gas Resources on the east coast with the potential to supply the eastern Australian gas markets, which AEMO forecasts will need supply from currently booked Contingent Resources from the early 2020's. The independently derived and certified Contingent Resource within the Betts Creek coals are a 1C of 308 PJ, a 2C of 2,508 PJ and a 3C of 5,314 PJ. The Company's primary focus is on converting these Contingent Resources to Reserves.

Outcomes from Glenaras 17A

The Glenaras 17A monitoring well has provided significant new positive information on the reservoir characteristics and vertical connectivity within the Betts Creek coal sequence. Critically, despite the variable reservoir quality of the coals, sands and siltstones within the Betts Creek section, preliminary analysis of the data from Glenaras 17A indicates that the entire Betts Creek i.e. the R1 to R7 coal sequence (and interspersed sandstones) is being depleted almost uniformly by the Pilot. As such, the Pilot, which is completed and producing from the R3 coal only, is successfully draining from the entire Betts Creek sequence, most materially in the host coal, but also demonstrably in each of the other seams tested. Importantly, data obtained from Glenaras 17A indicates that the Betts Creek coal sequence is isolated from other significant aquifer systems, particularly the overlying Hutton sandstone and Great Artesian Basin.

The monitoring well results have some very important and positive implications. Firstly, this vertical connectivity helps to explain the continued strong water production rates and pressure support observed in the R3 coal at the Pilot. The vertical connectivity is allowing other layers within the section (from the R1 through to the R7) to contribute and provide crossflow support. This is the key reason why the Pilot is taking longer to achieve critical desorption in the timeframe expected by the Company. It also helps explain the performance of some of the legacy well pilots nearby. However, notwithstanding this very large crossflow, the existing lateral wells have achieved extraordinary success in significantly reducing the reservoir pressure in the full section of the Pilot area by a material amount in a relatively short period of time. The Pilot continues to perform strongly with water rates at approximately 6,000 BWPD and gas rates have quickly recovered after the recent pressure survey work. From an original reservoir pressure of 1,450 psi, the Pilot has created a large pressure sink in the area which is, at its centre, approximately 700 psi and only 100 psi above critical desorption pressure

Secondly, the identification of this strong vertical connectivity within the full Betts Creek section, which appears to be widespread, has important benefits for future drilling and field development planning. As previously advised by the Company, the current Pilot was an initial step to accelerate first Reserves booking and any future pilots and future field development would most likely utilise vertical wells. The fact that there is such strong natural vertical connection within the sequence now, provides strong support that any future drilling, including any additional drilling within the Pilot area to accelerate results, will most likely be conducted using vertical wells completed over the entire Betts Creek section. This both simplifies and reduces the capital costs of any future drilling activities. It is more efficient to drain all layers of the Betts Creek section via vertical wells than to use more complex lateral wells draining from a single layer. That being said, the Pilot has been very effective, and this is due to the sheer volume of water extracted by virtue of the productivity of lateral wells, which has been instrumental in achieving the significant drawdown we have observed in the Pilot area to date.

Finally, and most importantly, the Glenaras 17A well has clearly demonstrated drawdown and depletion of the full section of coal within the Betts Creek and not just within the R3 seam. Therefore, a successful pilot at this location will be targeting a much larger Reserves booking given that all coal seams are being targeted. While it is expected that additional vertical well drilling will likely be required to achieve success, there is now the clear potential to access additional gas Reserves, increasing the near-term target 2P Reserve booking closer to 800 - 1,000 PJ.

Schlumberger Reservoir Simulation Modelling

To assist with the evaluation of the recently acquired results, and the forward plans with the Pilot, Schlumberger has been engaged to perform a reservoir simulation study. The work will consist of reservoir modelling to history match the legacy vertical pilots in the area along with data acquired from the more recent Pilot.

This modelling will analyse the optimum future drilling and completion design and the number of wells required to achieve a commercial outcome. The Company believes there is now sufficient production and pressure data to define the reservoir performance more accurately. Schlumberger is utilising multiple cloud-based computer systems that will dramatically reduce the time taken to complete the work. The results of this study will be used to develop the forward work programme by refining the drilling design and number of wells required to reach critical desorption. This work is expected to be completed in the next two to three weeks.

Contact:

Peter Lansom

Tel: +61 (0) 7 3177 9970

About Galilee

Galilee Energy is focused on creating a mid-tier exploration and production company building on its core strengths in coal seam gas appraisal and development. Its primary area of focus is Queensland where it is appraising the Galilee Basin and exploring in the Surat and Bowen Basins whilst looking to add further high-quality acreage to its portfolio.

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