Mr. James Hill reports

WELCHAU-1 DISCOVERY WELL DRILLING HAS BEEN COMPLETED AND THE WELL CASED FOR FUTURE FLOW TESTING; DATA ANALYSIS ONGOING

MCF Energy Ltd. concluded the drilling operations at the Welchau-1 well, and released the rig at 4 p.m. Central European Time on the March 28, 2024. The Welchau-1 well was drilled utilizing the RED E200 drill rig in the ADX-AT-II exploration licence in upper Austria.

Since the last report on March 25, 2024, the well has been successfully cased and temporarily shut in for future testing. The well was drilled ahead of schedule and below budget, thereby minimizing well costs while recovering an extensive data set that is required to assess the potential of the Welchau discovery.

A program of extensive analysis has commenced on well data, including hydrocarbon shows, formation cuttings recovered while drilling, petrophysical borehole log data, formation fluid sampling and formation coring. The analysis of pressurized sample chambers run in the well contained small amounts of liquid hydrocarbons (gas condensate to very light oil) which is detailed in the well data analysis below. As previously reported, down hole sampling was limited due to tool sticking which impacted the recoverability of samples. The results of the well data analysis will be used to update the resource range for the Welchau discovery and design the testing program for the Welchau-1 well. Future testing of the well is expected to be undertaken with a cost-effective workover rig.

Well data analysis

The analysis work program has already commenced from down hole pressurized fluid samples and the seven metres of whole core recovered from the Steinalm formation of the Welchau-1 well. The core analysis work is expected to take 16 weeks and the fluid sample work three weeks.

Downhole fluid samples

The analysis of downhole pressurized fluid samples recovered from the Welchau-1 well is being carried out at a specialized laboratory in Vienna. As reported previously, the modular formation dynamic tester (MDT) tool was stuck in the well bore during sampling, which limited the recoverability of samples. Despite these difficulties, two sample bottles were recovered containing small amounts of liquid hydrocarbons (gas condensate to very light oil) although most of the fluid was drilling mud that had been lost into the formation during drilling.

The samples are not an ideal representation for PVT (pressure-volume-temperature) analysis given the amount of drilling mud contamination. However, preliminary results indicate a similarity to the hydrocarbon system encountered and tested at in the down dip Molln-1 well drilled in 1989.

The planned Welchau-1 production test in Q4 2024 is expected to confirm the characteristics of the hydrocarbon system. Further analysis of the downhole fluid samples will continue, including viscosity, densities and, if sample volumes permit, a full PVT analysis.

Core analysis

Work has commenced on the analysis of the Welchau-1 seven metres of core at a specialized laboratory in Vienna. Preliminary assessment of the core using computerized tomography images (CT scan) confirms the reservoir is a carbonate with a low matrix porosity, vuggy porosity and an extensive vertical fracture network. This triple-porosity system is also evident from the open hole log data. The extent of vertical fractures within the core, which by their orientation cannot be seen in the borehole, is encouraging and can be expected to be very favourable for reservoir connectivity and production performance. It should also be noted that the indicative permeable events observed in the borehole (predominantly vugs and fractures), tabulated in the company's previous announcement, is only a component of the net rock at the borehole and does not account for the low porosity matrix or the vertical fractures.

A clean 100 per cent carbonate rock has, by its nature, the capacity to store hydrocarbons however the key to estimating the net pay volumes (that is, the connected porosity system) is inclusive of the combination of low-permeable but producible matrix porosity, the higher permeable vugs and the fractures. It should be noted that the fractures provide the primary flow pathways through the rock to the well bore.

Core analysis measurements, including porosity and permeability of the matrix, the vuggy rock and fractures will be carried out during data analysis. The Welchau-1 well test data will be instrumental to the calibration of the triple-porosity system for volumetric analysis and reservoir performance modelling.

The planned Welchau-1 well test will seek to confirm the hydrocarbon characteristics, determine the well productivity, the potential connected volumes to the well and ultimately the recoverable resource size.

James Hill, chief executive officer of MCF Energy, said, "We are very excited about evaluating the information gained from the Welchau 1 well, and building a testing and completion program to be executed when we return to the well site in the fall."

About MCF Energy Ltd.

MCF Energy was established in 2022 by leading energy executives to strengthen Europe's energy security through responsible exploration and development of natural gas resources within the region. The company has secured interests in several significant natural gas exploration projects in Austria and Germany with additional concession applications pending. MCF Energy is also evaluating additional opportunities throughout Europe. The company's leaders have extensive experience in the European energy sector and are working to develop a cleaner, cheaper and more secure natural gas industry as a transition to renewable energy sources. MCF Energy is a publicly traded company (TSX.V: MCF; FRA: DC6; OTCQX: MCFNF) and headquartered in Vancouver, B.C.

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