Carnarvon Petroleum (ASX:CVN) has advised that operator Apache Corporation (NYSE:APA) intends to sidetrack the Phoenix South-1 well off Western Australia.
Phoenix South-1 targets multi-trillion cubic feet of gas and is a potential value driver for the company.
Apache had been unable to retrieve the casing tool from the wellhead after setting and cementing the casing in place after the well was drilled to a depth of 3,706 metres.
As a result, forward progress in the current wellbore is not possible and the operator plans to cut and retrieve the casing from a point just below the 13 3/8” casing point to retrieve the stuck casing running tool.
It will then drill a new sidetrack wellbore will be drilled from this point down to the same depth as the initial hole.
The sidetrack operations are outside the scope of the original drilling plan and could add about 20 days to the expected drill schedule.
Carnarvon noted that if the total well costs exceed the farm-in cap, the additional cost net to itself is expected to be around $4 million for the respective time frames.
It has made provision for such eventualities and has the capacity to comfortably fund these additional costs, in the event the farm-in cap is exceeded.
Apache and JX Nippon are earning a 40% and 20% interest in WA-435-P, where the well is located, by funding drilling of the well to a cap of US$70 million.
Following the completion of drilling and in the event of hydrocarbons being intersected, extensive wireline logging and both pressure and fluid sampling are planned. These operations will continue for a further week.
At the completion of the wireline logging program, the Joint Venture intends to plug and abandon the well in accordance with normal good oilfield practice.
Carnarvon has a 20% interest in WA-435-P.
Apache and Nippon will also fund the contingent Roc-1 well in the adjacent WA-437-P to a cap of US$70 million.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.