Carnarvon Petroleum (ASX:CVN) has advised that the Brookfield Asset Management (NYSE:BAM) and Macquarie Capital (ASX:MQG) consortium (Quadrant Energy) has reaffirm intentions to drill the Roc-1 well in the fourth quarter of 2015.
This follows Quadrant Energy completing the acquisition of Apache Corporation’s (NYSE:APA) Australian assets.
The Roc-1 well targets P50 Contingent Resources of 42 million barrels of oil and follows on the successful Phoenix South-1 well in WA-435-P that was confirmed as a light oil discovery.
Quadrant and JX Nippon will fund drilling and testing costs within WA-437-P to US$70 million (gross cost). The current estimate to drill the Roc-1 well is around US$45 million.
Any shortfall can be carried over into subsequent testing or drilling activities within the permit.
It is anticipated a successful Roc-1 well will be suspended to allow for re-entry within six to twelve months to complete more extensive well sampling and to flow test the well.
This decision is based on factors pertaining to government approvals, cost and drilling processes.
Given the probability of success estimated for the Roc prospect, planning is also underway for the drilling of additional exploration and appraisal wells in late 2016.
These will likely be subject to a successful Roc-1 result, joint venture and government approvals and rig availability.
Given the extent of the work being undertaken the government recently agreed to extend the licence term until August 2017.
This is beneficial to the joint venture because no portion of the acreage has to be relinquished before this newly extended date.
Seismic plans
Two new multi-client seismic programs are being acquired over the four exploration permits that make up the Phoenix Blocks.
The multi-client (MC) 3D seismic project (Capreolus MC3D) is one of the largest single site surveys ever undertaken in Australian waters, and reflects the exploration interest within and around the Bedout Sub basin.
The joint venture will license approximately 5,100 square kilometres of the Capreolus MC3D and approximately 60% of this has now been acquired.
This data is expected to be processed and ready for interpretation early in 2016.
It will complement the 1,100 square kilometre Phoenix MC3D acquired in 2010/2011 and the 3,854 square kilometre Zeester MC3D acquired in 2011/2012.
Reprocessing of the Phoenix MC3D is also nearing completion.
New 2D seismic data is being acquired over the majority of the remaining approximately 12,000 square kilometres of the Phoenix area.
Acquisition of this data, Bilby MC2D, is approximately 45% complete.
Prospect generation is the key activity following seismic acquisition, processing (including reprocessing) and interpretation.
Given the timing of the different 2D and 3D surveys, it is anticipated that further prospect maps will become available at different times over the next 18 months.
Prospect mapping within the Zeester MC3D area is expected to be complete before the end of this year while prospect generation within the Phoenix MC3D area is anticipated to be complete by early 2016.
Mapping for the Bilby MC2D and Capreolus MC3D areas are not expected to be complete until mid to late 2016 or possibly early 2017.
Technical work
The Quadrant-led joint venture continues to work through post-well analysis of the Phoenix South-1 well and the surrounding wells in the permit.
This work addresses many geological aspects including reservoir development and quality, the type and potential source of the oils discovered and where it may occur further in the permit.
The amount of technical work being undertaken to evaluate a newly discovered hydrocarbon province necessitates a more thorough evaluation than for more established basins such as the Carnarvon and Dampier sub basins within the North West Shelf.
Two broad areas of study are currently being undertaken – those related to regional work around understanding this new hydrocarbon province and secondly those related to the reservoir characteristics with a view to understanding the potential development of the Phoenix South oil discovery and other prospective oil reservoirs in the province.
For the former, fluid inclusion studies are complete on all the previously drilled wells in the region which, when finalised around the middle of this year, will be incorporated into regional interpretation.
Along with petroleum system modelling and newly acquired seismic data, this will generate regional mapping and ultimately a portfolio of prospects across the Phoenix Blocks.
For the Phoenix South discovery, “special core analysis” (SCAL) is ongoing and expected to be complete by the end of calendar 2015.
This allows for better delineation of the flow characteristics and recovery from the reservoir rock.
This work will be integrated into static and dynamic computer models with a view to having a better handle on the range of possible recoverable oil by the end of this year.
Phoenix South-1 discovery
The discovery of oil in the Phoenix South-1 well in the WA-435-P exploration permit is the first step in unlocking a new hydrocarbon province on the North West Shelf of Western Australia; the first new oil play in the region for 20 years.
Phoenix South-1 is located approximately 180 kilometres north of Port Hedland WA in 133 metres of water.
At the time of the discovery the area was very lightly explored, with a total of 7 wells drilled on poor data and sparse seismic coverage over four permits covering more than 22,000 square kilometres.
The acreage was acquired in a gazettal round in 2009 by Carnarvon Petroleum and Finder Exploration, and both Apache Energy and JX Nippon farmed into the project in 2012, prior to drilling of the discovery well.
Phoenix South-1 was drilled from May to August 2014 and reached a total depth of 4,595 metres.
The sands within the entire objective reservoir section showed elevated gas readings and fluorescence, indicative of hydrocarbon presence, however initial data acquired while drilling was inconclusive regarding the fluid and rock properties.
Wireline formation testing indicated better than expected inferred permeability, but the critical breakthrough was recovering crude oil samples to surface.
A total of six light oil samples were recovered from three zones along with a significant number of sidewall rock samples from up to six different sand and shale intervals.
An independent report by DeGolyer and MacNaughton estimated a Contingent Resource of 31 million barrels for the Phoenix South-1 3D area.
Analysis
There is a strong pipeline of news flow ahead for Carnarvon Petroleum with new joint venture partner Quadrant Energy committing to the drilling of Roc-1 in the fourth quarter of 2015.
That planning is also underway for the drilling of additional exploration and appraisal wells in late 2016 further highlights the region’s potential as a new oil province.
Carnarvon is fully funded for further activity in the North West Shelf in 2015 with $102.2 million in cash as at 31st March 2015.
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