Carnarvon Petroleum Ltd (ASX:CVN) has reported that the operator of the Roc-2 well, Quadrant Energy, has advised that the well commenced drilling on 9 July 2016.
The Roc-2 well will be drilled in around 100 metre water depth, located 160 kilometres north-east of Port Hedland in the Bedout sub-basin of the greater Roebuck basin.
The Roc prospective and contingent resources are within the WA-437-P exploration permit in the North West Shelf of Australia.
Quadrant (80%) is the operator, with Carnarvon holding a 20% interest.
Drilling aims
The main aims of the Roc-2 well are to appraise the Roc gas-condensate discovery in the Caley section that Carnarvon announced earlier in the year, and to progress towards proving a volume above the minimum economic field size and to establish potential flow rates for future development planning.
Secondary objectives for the well are to explore the hydrocarbon potential of the deeper Milne member, where encouraging hydrocarbon shows were observed during the final phase of drilling the Roc-1 well, and the shallower Huxley member, where oil shows were encountered at Roc-1.
Timeline
The well will take around 60 days to drill down to a total depth of around 5,250 metres, including the cutting of 120 metres of core, before the evaluation program is undertaken.
The evaluation, including wireline logging and flow testing, is expected to extend over a further 40 days.
Analysis
Carnarvon holds a market value of circa $100 million with $96 million cash, future cash flow up to $44 million and a well carry of $8 million.
Board and management, made up of North West Shelf experts, own 7% of the company.
Carnarvon has two material drilling outcomes within the next 6 months.
- Outtrim East-1 exploration well where the target is to prove an oil aggregation play; and
- The Roc-2 appraisal well which aims to confirm that Carnarvon will take part of a material domestic gas project.
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