2.0 RE-ENTRY DRILLING AND CASING

Shenandoah-1A, NT, Australia – Well Completion Report

2.0 RE-ENTRY DRILLING AND CASING

The Shenandoah-1 well was drilled and cased to a depth of 1550m in 2007 by Sweetpea Petroleum / PetroHunter Energy Corporation. On 23 August, 2009, the Shenandoah-1A well commenced drilling at the Shenandoah-1 location and the borehole was deepened to 2,714m. Significant natural gas shows were encountered in the section from 1555m to 2714m. Following wireline logging, 6 cement plugs were set in the borehole and the well was suspended for further evaluation as summarized in the Shenandoah-1A Interim Well Report which was attached to the 2009 Annual Report. On 14 September, 2011, the re-entry of Shenandoah-1A well commenced. Australian Drilling Services (ADS) Rig #6 was used for the re-entry drilling operations. One 8 ½” XR+ milled tooth three-cone bit was used to drill through the 6 cement plugs. During cement drilling KCl – Pac-LV mud system was used, the mud weight was between 8.9 -9.0 ppg.

A list of drilling equipment specifications is included in Appendix I of this report. The application and supporting documents submitted for Shenandoah-1A re-entry are included in Appendix II.

2.1 Drilling Summary

Daily Drilling Reports (DDR) are included in Appendix III of this report. The following is a summary of the activities included in the Daily Drilling Reports.

14.09.2011 FROM TO HRS Depth

(m) Activity

0:00 4:00 4.00 75 L/O DP breakout sub, DC,DP. RIH to 40m & M/U XO lower kelly cock. M/U kelly.

4:00 4:30 0.50 75 R/U to p-test pipe rams. Toolbox meeting & review SWI#6

4:30 5:00 0.50 75 Initiate test on pipe rams, pipe began jacking out of hole.

5:00 10:30 5.50 75 Instructions were given to ADS to drill plug#1 at 75mRT. ADS shutdown operations due to accounting department issues with payments. Wait on orders from town to go ahead with M/U BHA.

10:30 13:00 2.50 75 M/U BHA

13:00 13:15 0.25 75 P/U Kelly & M/U to string at 67mRT, break circulation with MP#1 & MP#3

13:15 15:30 2.25 75 Fix hose under rigfloor. Work on mud pumps.

15:30 16:00 0.50 75 Break circulation & RIH to 79mRT, no cement tagged.

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16:00 17:30 1.50 135 P/U DC from mousehole & RIH from 79mRT to 88mRT noting any tagged cement. Nothing tagged. Continue RIH from 88mRT with kelly circulating to 106mRT. Soppy green cement over shakers but nothing tagged or noticed on the martin decker. Original plugged set between 75mRT & 135mRT.

17:30 19:00 1.50 135 Changeout XO & Kelly Sub to RIH drill pipe.

19:00 20:30 1.50 160 Circulate & clean hole with kelly down to 160mRT.

20:30 22:15 1.75 320 Trip in hole with 4" drillpipe 320mRT.

22:15 23:15 1.00 320 Change out to drillpipe elevators on drill floor.

23:15 0:00 0.75 422 Continue tripping in hole to 422mRT.

15.09.2011 0:00 1:15 1.25 427 Continue RIH with 4" DP, Tag cement at 427mRT, P/U kelly

& ream cement.

1:15 6:00 4.75 590 Wash down through ratty strung out cement from 427mRT to 590mRT

6:00 10:00 4.00 700 Trip & Ream through strung out cement from 590mRT to 700mRT.

10:00 13:00 3.00 1100 Trip in hole to 1100mRT

13:00 14:30 1.50 1100 Strap drill pipe

14:30 22:00 7.50 1500 Wash & ream down to 1500mRT

22:00 0:00 2.00 1500 Pressure test annular preventer, 500 low & 3800psi high for 5/10 min, test OK. Test pipe rams, 500 low & 3000psi high for 5/10 min. Test OK.

16.09.2011 0:00 5:00 5.00 1500 Mix mud to even 8.8ppg prior to drilling out shoe plug.

5:00 9:00 4.00 1521 Continue drilling shoe plug from 1500mRT

9:00 9:30 0.50 1521 Change out saver sub, shackles & tong line pull gauge.

9:30 10:00 0.50 1530 Continue drill out cement from 1521mRT

10:00 10:30 0.50 1530 Rig service


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12:00 14:00 2.00 1618 PJSM, continue drill out cement from 1559mRT

14:00 14:30 0.50 1664 RIHf/1618m-1664m


23:00 23:30 0.50 1866 Continue RIHf/-1832m-1866m


2011.09.17 0:00 4:30 4.50 1957 Continue drill out cement from 1870mRT

4:30 5:00 0.50 1957 Kelly hose hooked up on power tong hanging frame fix


7:30 8:00 0.50 2034 Rig service

8:00 8:30 0.50 2034 Complete inspection of stuffing box on break cooling system.

8:30 10:00 1.50 2073 Continue to drill cement plugs from 2034mRT

10:00 10:30 0.50 2100 Rack kelly & RIH from 2073mRT

10:30 12:00 1.50 2131 P/U Kelly and drill cement from 2100mRT


15:30 16:30 1.00 2209 Repair to turbo exhaust clamp

16:30 18:00 1.50 2267 Continue reaming from 2209mRT

18:00 19:00 1.00 2400 RIH from 2267mRT

19:00 20:30 1.50 2400 Continue reaming

20:30 22:00 1.50 2400 Repairs to stuffing box (drum cooling)

22:00 0:00 2.00 2528 Continue reaming from 2400mRT

2011.09.18 0:00 4:30 4.50 2703 Continue reaming from 2528mRT

4:30 5:00 0.50 2703 Unable to pass 2703m, getting stuck, work free and confirm TD @ 2703m

5:00 8:30 3.50 2703 Circ hole clean

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8:30 9:00 0.50 2703 Pooh from 2703m 1 single

9:00 9:30 0.50 2703 Rig service

9:30 12:00 2.50 2703 Pooh rack back in mast to 2420m

12:00 13:30 1.50 2703 Pooh from 2420mRT to 2203mRT

13:30 15:30 2.00 2703 Allow drawworks engine to cool down clean & fix turbo


16:00 21:00 5.00 2703 Repair elevators to suit 4" pipe


22:30 23:00 0.50 2703 P/U Kelly break circ & pump slug continue pooh


2011.09.19 0:00 5:30 5.50 2703 Flow check & continue pooh

5:30 6:00 0.50 2703 Flow check pjsm on running wireline logs

6:00 6:30 0.50 2703 R/U to run wireline logs

6:30 12:00 5.50 2703 Run wireline logs

12:00 16:00 4.00 2703 Continue run wireline logs

16:00 17:00 1.00 2703 R/D wireline loggers

17:00 22:30 5.50 2703 RIH, BHA & DP

22:30 0:00 1.50 2703 P/U kelly soft break, I/o subs r/u to I/o sideways, tody floor of all equipment not needed.

2011.09.20 0:00 6:30 6.50 2703 Continue to pooh with DP & 6 1/4" DC and L/O side ways.

6:30 7:00 0.50 2703 Rig service & inspect hydromatic chain

7:00 8:00 1.00 2703 Lay Down drill collars

8:00 8:30 0.50 2703 R/D Drill floor & R/U for Drill pipe trip

8:30 12:00 3.50 2703 RIH with 4" drill pipe to 1248mRT

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12:00 17:00 5.00 2703 Lay Down 122 Singles

17:00 20:30 3.50 2703 R/U Weatherfords to run 4 1/2" casing

20:30 0:00 3.50 2703 Run 4 1/2" casing to 304mRT

2011.09.21 0:00 6:00 6.00 2703 Continue to run 4 1/2" casing to 1320mRT

6:00 12:00 6.00 2703 Run 4 1/2" casing to 1992mRT

12:00 15:00 3.00 2703 Continue RIH with 4 1/2" casing from 1992mRT to 2701mRT

15:00 19:30 4.50 2703 P/U circ swedge, 2" hose & circ, r/d Weatherford, change to long balls, pump sweep & rice, rice to surface @ 1810pm

19:30 21:30 2.00 2703 B/O circ swedge, load bottom plug in pipe, R/U Halliburton cement head load top plug & continue to circulate hole, while Halliburton premix tuned spacer and cementing chemicals

21:30 0:00 2.50 2703 Hold PJSM with crews & Halliburton hands. Pump away 70 bbl tuned space with mud pump, mix and pump 80bbl Scavenger slurry @ 11.8 ppg, Recoprocate pipe while pumping, until 10,000 lb over pull recorded, continue pumping Lead and Tail @ 14.5 ppg, cement slurry

2011.09.22 0:00 1:00 1.00 2703 Continue to pump cement, displacement 126 bbls @ 8 bbls/min

with returns, bump plug @ 2983 psi and hold for 5 mins, bleed back 1.5 bbls

1:00 12:00 11.00 2703 Wait on cement, dump & clean mud tanks, clean up all loose equipment around lease and put away, r/d choke manifold, flare line, mud pump number 2.

12:00 13:00 1.00 2703 Continue to wait on cement and ready for N/D BOP

13:00 16:00 3.00 2703 N/D riser and flow line, Koomey lines, HCR and Choke line, N/D BOP

16:00 17:00 1.00 2703 Set slip & seal set @ 146k

17:00 17:30 0.50 2703 Rough cut 4.5" casing

17:30 0:00 6.50 2703 L/O kelly & rat hole, kelly bushing, balls elevators, swivel, mouse hole, "v" door, catwalk, nipple up "c" section. Rig release @ midnight 00.00 Hrs

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Acronyms

BHA - bottom hole assembly

B/O - back off

DP - drillpipe

DC - drill collar

L/O - lay out

M/U - make up

N/D - nipple down

P/U - pick up

PJSM - pre-job safety meeting

R/D - rig down

R/U - rig up

XO - crossover

The mud log recorded by Geoservices during the re-entry of Shenandoah-1A is included in Appendix IV of this report. The mud log is recorded in time; however the well Depths are noted on the right hand edge of the mud log

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2.2 Casing and Cementing

4 ½” 15.1 ppf P-110 casing was installed (0-2714m) and cemented (see Appendix V).

The final revision of the cementing program was sent to Falcon on the 15th of September and had outlined the following fluids to be mixed and pumped by Halliburton on the 21st of September:

• 80 bbls of drill water • 80 bbls of 8.58 lb/gal Tuned Spacer E+ • 80 bbls of 11.0 lb/gal scavenger cement slurry • 362.7 bbls of 15.8 lb/gal of 14.5 lb/gal single cement slurry (ElastiCem™)

Figure 2.2.A Halliburton Cement/Pumping Job Summary.

Top of Cement:

• 1,466mMDRT (Based on the volumes pumped) • 1,480mMDRT (CBL & ACE)

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2.3 Cement Bond Log A cement bond log (CBL) was run on the 28th of September 2011. In addition an Advanced Cement Evaluation (ACE) analysis was conducted by Halliburton on the 30th of September 2011. Both the CBL and ACE logs are Enclosures included in this report. Interpretations of the Shenandoah-1A cement bond by Apex Engineering and Hoyer Petrophysics are included in Appendix VI. There is good agreement among the analyst that the cement bond on the Shenandoah-1A, Stage 1-5 stimulations and well test is sufficient and provides good zonal isolation and containment. Cement bond log analysis over the Stage 1, Middle Velkerri Lower B interval (2529-2548 mMDRT) indicate good cement bonding and zonal isolation throughout the interval (Figure 2.3.A).

Figure 2.3.A Stage 1: CBL & ACE analysis indicates good cement bond and zonal isolation.

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Cement bond log analysis over the Stage 2, Middle Velkerri B interval (2481- 2482 mMDRT) indicate good cement bonding and zonal isolation throughout the interval (Figure 2.3.B).

Figure 2.3.B Stage 2: CBL & ACE analysis indicates good cement bond and zonal isolation.

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Over Stage 3, the cement bond log analysis (Figure 2.3.C) indicates good cement bonding and zonal isolation throughout the Moroak Deltaic interval (1833-1910 mMDRT).

Figure 2.3.C Stage 3: CBL & ACE analysis indicates good cement bond and zonal isolation.

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Over Stage 4, the cement bond log analysis (Figure 2.3.D) indicates good cement bonding and zonal isolation throughout the Moroak Deltaic interval (1728-1780 mMDRT).

Figure 2.3.D Stage 4: CBL & ACE analysis indicates good cement bond and zonal isolation.

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Cement bond log analysis over the Stage 5, Lower Kyalla interval (1631-1648 mMDRT) indicates poor cement bonding. However above and below the 50 m interval the cement bond log indicates good cement bond and consequently zonal isolation of the Lower Kyalla test (Figure 2.3.E and F).

Figure 2.3.E Stage 5: CBL & ACE analysis indicates good cement bond and zonal isolation.

Figure 2.3.F Lower Kyalla: Hoyer Petrophysics analysis of cement bond quality and zonal isolation.

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Cement bond log analysis across the 9 5/8 inch Casing Shoe (1554 mMDRT) indicates an adequate cement bond which isolates the 8 ½ inch open hole section.

Figure 2.3.G CBL & ACE analysis across the intermediate, 9 5/8 inch casing shoe.

Based on the volumes pumped, the theoretical TOC of the 14.5 lb/gal ElastiCem cement slurry is 1,466mMDRT. An analysis of the CBL & ACE shows the projected TOC at 1,480mMDRT (Figure 2.3.H).

Figure 2.3.H CBL & ACE analysis showing TOC @ 1480

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2.0 RE-ENTRY DRILLING AND CASING

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