Carnarvon Petroleum Ltd (ASX:CVN) has provided an update following a recent meeting of the WA-435-P and WA-437-P joint venture partners.
Quadrant Energy is the Operator (40%), JX Nippon 20%, Finder Exploration 20%, and Carnarvon 20%.
Roc-1 well confirms up to 372 Bscf of gas and 18 million barrels of condensate recoverable (Gross 3C contingent resource).
Additional prospective resources of 328 Bscf of gas and 16 million barrels of condensate recoverable (Gross high estimate prospective resource).
The preliminary minimum economic field size as estimated by Carnarvon Petroleum is around 325 Bscf and 17 million barrels of condensate (Gross).
The joint venture partners have unanimously agreed that the Roc discovery warrants appraisal.
Planning is underway to drill a Roc-2 appraisal well early in the second half of calendar 2016 to confirm the higher volumes as depicted.
Adrian Cook, MD and CEO, commented:
“The Roc structure is a particularly compelling appraisal proposition.
"We are confident about several important elements in the structure, including the quality of the gas and condensate discovered in the Roc-1 well, the quality of the reservoir rocks that contain the discovered hydrocarbons, the outer extent of the structure via the gas water contact and the size of the structure as mapped on modern 3D seismic data.
"The Roc-2 well will seek to prove that gas and condensate exists down to the gas water contact (GWC).
"In this case it is expected the volumetric range will narrow to the “Best” to “High” estimate for the aggregated contingent and prospective resources.
"This outcome, on our projections, would be above the minimum economic threshold."
Roc-2 details
Roc-2 has been assessed as a relatively low risk appraisal well with a successful outcome being a significant step forward in supporting a development hub for gas and liquids (oil and condensate) that also opens up the province to additional development and appraisal projects.
Phoenix South structure
Cook added: "In terms of potential additional development and appraisal projects we continue to assess the Phoenix South structure.
"This project was always considered for its tie back potential to Roc and is still of interest in this regard.
"We are also considering the regional significance of compelling hydrocarbon shows recorded in the deeper section of the Roc-1 well, that were observed down to the well’s total depth (TD).
"The science clearly shows us there are prolific hydrocarbon generating source rocks within the Bedout sub-basin and our new 3D seismic data stretching beyond the Roc structure is showing us there are a significant number of large structures warranting further exploration within the area.”
Next steps
The Operator is currently advancing a suite of technical projects that are expected to be completed over the course of the 2016 calendar year.
This work will assist in future drilling activities including the Roc-2 appraisal well.
Planning for this well is in progress and at this time drilling is expected to commence early in the second half of calendar 2016 and will include full conventional coring of the reservoir followed by flow testing.
The Roc-2 well location is expected to be some 5 to 6 kilometres to the east of the Roc-1 well.
The well has an estimated 80% chance of geological success with the extent to which the Caley sandstone reservoir is present being the primary risk.
Analysis
Carnarvon maintains its strategic focus on the North West Shelf of Australia, with two discoveries in the first two wells.
Two more wells are planned for CY 2016, with the company actively growing its asset portfolio in the current period of opportunity.
The Roc-1 well follows the Phoenix South-1 oil discovery drilled in late 2014, 20 kilometres to the North West of Roc-1, by the same joint venture partners as the Roc-1 well.
These wells together with the original Phoenix-1 and 2 discoveries drilled by BP in 1980 and 1982 in conjunction with the recent technical work completed, prove that an active petroleum system exists in the area.
The quality of the reservoir discovered in the Roc-1 well is an important and significant step forward in unlocking the commercial potential in the region.
Strong financial standing:
- Market cap. of $80 million, with $100 million in cash and no debt.
- Plus a $45 million receivable from future oil sales (up to).
- $8 million cost carry on Roc-2 well net to Carnarvon.
(Oil sales: Calculated as 12% of 20% of Thailand oil field revenue, cash of $1.1 million received from scheduled first payment).
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