ORIGIN Energy has spudded the second well in a three well drilling and evaluation program in the Beetaloo basin, located on exploration permit 98 in the Northern Territory.

Project partner Falcon Oil & Gas announced the Amungee NW 1 well would target the Middle Velkerri formation in the permit area to assess existing hydrocarbon saturation and reservoir quality.

Origin will operate the drilling program, with Saxon Energy Services rig 185 to be used to drill the well to an estimated total depth of 2,700 metres.

Falcon chief executive Philip O’Quigley said the well was the second of a three well drilling program, following the drilling of the Kalala S1 well, about 25 kilometres west of the current well site.

“We’re currently evaluating the extensive sidewall core and wireline data and the geochemical analysis of cuttings acquired from Kalala S1 and look forward to reporting our findings in the near future,” he said.

Ultimately the three well campaign will see formation evaluation and reservoir characterisation carried out from the initial three wells through petrophysical interpretation, core analysis, geomechanical studies and stimulation design, Falcon said.

The Kalala S1 well was drilled to a total depth of 2,619 metres and hit a cross interval of over 500 metres of shale gas, with net pay exceeding 150 metres.

Moveable hydrocarbons were found, along with a number of good quality reservoir sections measuring between 50 and 80 metres in thickness, Falcon said.

Mr O’Quigley said preliminary evaluation of the well showed an excellent start to its drilling program and provided new insights into the prospectivity of the Middle Velkerri formation.

“This well represents the first step in un-locking the resource potential of our Beetaloo acreage. It will provide key input to the planning of multi-stage fracking and production testing in the scheduled vertical and horizontal exploration and appraisal wells,” he said.

Origin operates the permit area with a 35 per cent stake, while Sasol Petroleum Australia holds another 35%.

Falcon retains 30% following a farm-out conducted in May last year with the two companies.

Origin and Sasol agreed to pay for the full cost Farminees will pay for the full cost of completing the first five wells estimated at $64 million, and will fund any cost overruns, with work expected to be completed between 2015 and 2016.

The companies will also pay the full cost of the following two horizontally fracture stimulated wells, as well as 90 day production tests and micro seismic data collection expected to be undertaken in 2017.

Spending for those wells is to be capped at $53 million, with spending on another two horizontally fracture stimulated wells and associated production tests capped at $48 million, with any cost overrun funded by each party in proportion to their working interest.