The drill rig at Carnarvon Petroleum’s (ASX:CVN) Roc-1 oil well in Australia’s North West Shelf region is in place and ready to begin a much anticipated program targeting a known reservoir.
The company confirmed today that the rig operator, Quadrant Energy, was ready to spud once the rig owner, Noble Corporation, received certification and approval for in-transit safety case modifications.
Spudding of the well has been carried to US$70 million by JX Nippon and Quadrant – a consortium between Brookfield Asset Management (NYSE:BAM) and Macquarie Capital (ASX:MQG).
The exploration program is expected take about 35-40 days to a depth of 4.7 kilometres.
A promising prospect
Roc will target the same Lower Keraudren reservoir in which oil was discovered in the 2014 Phoenix South-1 well by the same joint venture partners in an adjoining area of the wider Phoenix project.
Well logging and sidewall coring is expected to take about 5-10 days in a success case.
If the initial drilling is successful, the plan is to re-enter the Roc-1 well bore in Q3, 2016 for comprehensive testing (including flow testing) and coring.
Carnarvon is targeting a best-case estimate of 42 million barrels of oil at Roc.
This would represent a substantial portion of the larger Phoenix resource, estimated in a best-case scenario to total 104 million barrels of oil over only 5% of acreage held by Carnarvon.
About 45% of this acreage is expected to be explored using 3D data techniques before the end of the calendar year. This program is supported by $52 million in investment commitments and is aimed at identifying new targets for drilling over 2016 and 2017.
Analysis
Carnarvon’s readiness at Rock represents the encouraging culmination of a sustained and systematic effort to develop a priority target within its Phoenix offshore project portfolio.
This bodes well for the broader project’s further development, especially in light of Roc’s high prospectivity as a target well for a substantial proportion of the oil in a known reservoir.
Investor support for the latest progress at Roc has been illustrated by a 20% improvement for Carnarvon stock since the start of last month to A$0.12.
The company currently enjoys a market capitalisation of, A$119 million and a strong financial position with no debt and cash of $103.2 million as of the end of September.
Carnarvon also boasts up to US$32 million in future cash flow from oil receipts.
Importantly, Roc-1 is well funded to US$70 million (gross) by Quadrant Energy and JX Nippon.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.