Bombora will earn an initial 10% working interest by funding 20% of the Dempsey‐1 well drill program up to a gross well cost cap of about A$5.2 million (US$3.8 million).
The company will also have the right to earn an additional 10% working interest by funding a further 12.5% of the drill program.
Following this key milestone, Sacgasco plans to drill a 3,200 metre appraisal and exploration well in April‐May 2017.
The Dempsey structure sits beneath a developed gas field from which Sacgasco currently produces.
The gas plant has available capacity that would be utilised for a fast track development of any gas reservoirs proved by the Dempsey 1 well.
The deterministic prospective resource at Sacgasco’s primary targets range from 116 billion cubic feet (bcf) to 352 bcf of recoverable gas.
Should all the stacked reservoirs be full of gas, the cumulative un-risked recoverable prospective resources could total up to 1 trillion cubic feet of recoverable gas.
California consumes enormous quantities of gas, equivalent to around 2.25 times the entire output of Australia’s North West Shelf LNG plants. But the state only produces 10% of this consumed gas.
The strong recovery of California gas prices to over US$3.60 (per thousand cubic feet) underpins an optimistic outlook for the economic sale of natural gas in California.
Sacgasco’s share price has increased by about 12% since the beginning of this year, last trading at $0.073.