Adelaide, Oct 27, 2008 AEST (ABN Newswire) - Central Petroleum Limited (ASX:CTP)(PINK:CPTLF) announce the quarterly report to September 2008 with detail on exploration activities.
The exploration model/philosophy behind the company's long history of tenement acquisition as well as its exploration strategy, is based on the belief that many of Australia's onshore frontier basins are grossly underestimated in terms of their hydrocarbon potential. For nearly a decade since 1998 when oil was trading at US$12/bbl, Central has pursued this strategy with the acquisition of over 250,000 sq km of highly prospective exploration holdings in Central Australia.
The main highlights of the quarter to Septermber 30th were the drilling of the Blamore 1 well in EP 93, (Petroleum Exploration Australia Limited ("PXA" - 20%) and Merlin Energy Pty Ltd, a Central Petroleum Limited wholly owned subsidiary ("Merlin"- 80%). The Group's first Coal Bed Methane well, CBM93001, in EP 93 (Merlin 80%) with PXA (20%). Following completion and suspension of CBM93001 as a potential producing well to be flow tested at a later date, Hunt Rig 2 was mobilised to Simpson 1 in EP 97 (The Simpson Prospect Block) in Joint Venture with the permit holder Rawson Resources Limited, ("Rawson"-20%), PXA (15%) and Merlin (65%). Simpson 1 was subsequently spudded on 1st October 2008.
Although a commercial oil discovery has not been made, great strides have been made in the Group's understanding of the basins involved by the recently acquired and processed seismic and of course the drilling results obtained to date. Central Petroleum Limited is the Operator of all of the Joint Venture operations.
Wells Drilled and Planned for the Quarter
- Blamore 1 oil - this well was plugged and abandoned The well suffered hole instability problems and although terminated prematurely at 2,128m before reaching the planned Total Depth of 2,500m, demonstrated the existence of a much thicker sequence of Permian gas bearing coals than anticipated. Although attempted Drill Stem Tests ("DSTs") of the coal beds failed due to tool problems, the MREX (Nuclear Magnetic Resonance electric log) showed evidence of permeability, there were 160m of net coal interpreted and gas inclusive of heavier fractions of up to a total reading of 233 units was recorded during drilling. The results of the drilling at Blamore 1 were thought to have very positive implications for the Coal Bed Methane ("CBM") drilling programme later in 2008. A third party with interests in the Australian energy sector funded the cost of attempted Drill Stem Tests (DSTs) at an approximate cost of $600,000 in return for an exclusive option to negotiate on farmins over the Group's acreage as well as a placement or placements of shares in the parent entity, Central Petroleum Limited. The option subsequently expired on 6th October 2008.
- CBM93001 Coal Bed Methane - this well intersected over 140m of net coal, a similar package to the coals at Blamore 1. The lower coals showed significant gas peaks while drilling and drill stem testing showed evidence of permeability. Comprehensive testing of data gathered is still in hand but preparations are being made to apply for permission to attempt to flow the well after the installation of appropriate de-watering equipment.
- The Simpson1 oil prospect well was targeting 190 MMbbls UOIIP ready to drill. This well was subsequently spudded on the 1st October 2008 but plugged and abandoned as a non-producer following electric logging. Hunt Rig 2 was released on the 22nd October 2008.
- Further decisions on the remainder of the 2008 drilling programme await the deliberations of the Joint Venture partners at the time of preparation of this report. The proposed programme remaining for 2008 is :
- Coal Bed Methane wells CBM 93002 and 107001 - first stage exploration for 34-70 TCFG prospective recoverable resources ready to drill.
- Mt Kitty gas-Helium-condensate 3.0 TCFG, 185 BCFG Helium UGIIP ready to drill.
- Ooraminna gas-1.9 TCFG UGIIP ready to drill. Contingent wells 2008
- Johnstone oil 320 MMbbls UOIIP additional pre-drilling seismic was fully mapped by June 2008.
- Waterhouse gas 2.7 TCFG UGIIP ready to drill.
- Magee gas-Helium-condensate 60 BCFG, 4 BCFG UGIIP additional pre-drilling seismic was fully mapped by August 2008.
Note : "UOIIP" refers to Undiscovered Oil Initially In Place at "high" estimate and "UGIIP" refers to Undiscovered Gas Initially in Place at "high" estimate.
The drilling programme is, of course, subject to various operational contingencies and exploration results. Only one well (apart from the attempted drilling of a well in the Beetaloo Basin by Sweetpea Petroleum) has been drilled in the last fifteen years in this region due to the previous lack of infrastructure and relatively low oil prices until 2004 when both the oil price reached new highs and the Alice Springs to Darwin rail link was completed. There are significant logistical problems to overcome in relation to long range desert operations but the Group has found ways to reach solutions to any problems encountered thus far.
AMADEUS BASIN
EP 82, EP 106, EPA 111, EP 112, EP 115, EP 118, EPA 120, EPA 124, EP 125, EPA 133, EPA 137,EPA 147, EPA 149, EPA 152 and SPA 7/04-5
Structural and Remote Sensing Analysis and Seismic
During the quarter, the group applied for and received a grant from the Northern Territory government for half of the cost of conducting a gravity survey over the Henbury area in EP 112 to assist in mapping salt related structures and prospects.
Applications for other exploration permits are at various stages of progress.
PEDIRKA BASIN
EP 93, EP 97, EP 105, EP 106, EP 107, EPA 130, EPA 131 and PELA 77
The results of Blamore 1 have been discussed above.
In the Pedirka/Eromanga Basin, the 2008 seismic survey covered three strong oil leads, the Vivienne, Guinevere and Madigan leads. Total petroleum addressed by these leads is up to c.1 Billion barrels UOIIP. Mapping of the seismic results has commenced but results have not as yet been readied for release. Seismic acquisition over the track to Blamore has provided better definition of coal beds and conventional targets on the Andado Shelf and the Eringa Trough.
For its 2008 drilling program, Central has targeted geological variance in its prospects to mitigate geological risk, relatively shallow drilling targets to reduce cost and has also favoured early cash flow.
A new play type was announced on the 29th August 2008. A study of recently acquired seismic in the Pedirka Basin area synthesized with older vintages of seismic allowed the definition of a new Devonian carbonate platform complex play at depth in the underlying Warburton Basin sediments largely within the Simpson prospect block in EP 97, the subject of a farmin deal with Central, Rawson Energy Limited (RAW) and PXA being joint venture partners at participating interest levels projected of 65%, 20% and 15% respectively.
Two prospects, the Erec and Lucan prospects, based on the new Devonian carbonate complex play type have been outlined to date have combined potential to host large volumes of Undiscovered Oil (or Gas) Initially in Place up to a cumulative total in excess of about 5 Bbbls (billion barrels) oil equivalent at "high" estimate. (SPE definition)
Applications for other exploration permits are at various stages of progress.
Other Pedirka Basin Highlights
Other highlights pertinent to the Pedirka Basin included:
- Two new oil leads, Flat-top and Roundtop, were delineated on the Blamore Track seismic.
LANDER TROUGH EPA 92, EPA 129 and EPA 160
The CLC notified the Group that its application for Exploration Permit EPA 92 by Merlin had been rejected. Thus far, the CLC has not explained to the Group, as required by law, the processes undertaken by them. The Group has a number of options in regard to the area applied for inclusive of various sections of the Aboriginal Land Rights (Northern Territory) Act 1976 Commonwealth as amended ("ALRA") and the Administrative Decisions (Judicial Review) Act 1977 Commonwealth ("ADJR Act"). The Group will address this issue with all due vigour. It has been revealed that contrary to the provisions of the Aboriginal Land Rights Act, the CLC did not facilitate initial meetings with all of the relevant Traditional Owners some of whom may now seek to take action against the CLC.
The CLC has informed the Group that consent to grant of EPA 129 had also been withdrawn but the Group applied for an extension of the time to negotiate to the Minister of the Northern Territory Department of Primary Industry, Mining and Fisheries which was granted subsequent to 30 June 2008 and now awaits the CLC to arrange initial meetings with relevant Traditional Owners.
A new Exploration Permit, EP 160 was applied for bordering the northern boundary of EPA 92 and targeting similar play types.
GEORGINA BASIN EPA 132 and ATP APPLICATIONS 909, 911 and 912
Negotiations with regard to the applications for Exploration Permit EPA 132 have not yet commenced.
Merlin Energy Pty Ltd emerged during 2007 as the successful bidder for three exploration permits in Queensland with areas totalling 9,000 km22. The Company's wholly owned subsidiary, Merlin Energy Pty Ltd, was notified by the Queensland government that it was the preferred tenderer with priority to apply for a title grant over ATP 909, ATP 911 and ATP 912 in the Queensland portion of the southern Georgina basin, which hosts oil and gas targets in Middle to Late Cambrian petroleum systems.
The right to negotiate process is being pursued by the Group to facilitate the granting of these permits.
The Queensland applications are part of Central's exploration strategy of gaining an early-entry position into under-explored prospective onshore basins of central Australia, with the accompanying aim of building up "whole-of-basins" positions.
Although under-explored, the Georgina Basin hosts a rich Cambrian petroleum system which has been well documented. The area is believed to have generated more than 40 billion tonnes of hydrocarbons in its lifetime.
In the Northern Territory portion of the Georgina basin, there have been some 20 exploration wells drilled, with 13 of them yielding live oil shows, despite the absence of adequate seismic definition at the time. The Georgina basin is largely oil-prone, although Central's Queensland holdings are partially adjacent to Ethabuka-1, which flowed a small amount of gas from the Kelly Creek Formation. Not surprisingly, oil will be the main target on the shelf updip of this syncline, as drilling to date has consistently yielded oil shows and indications of oil migration.
GAS TO LIQUIDS ("GTL") and Helium
Discussions continue with appropriate GTL technology holders concerning the Group's long term plans to monetise any gas reserves proved by drilling. With the recent intensity of activity in the CBM industry, especially the various plans mooted to produce LNG from Queensland CBM resources having a positive effect on domestic gas prices, it is conceivable that domestic gas prices may improve in the future to the extent that a pipeline linking central Australia to the domestic gas markets on the eastern seaboard may be a viable option to assist in monetising otherwise stranded gas thought to exist in the central Australian Amadeus, Pedirka, Lander Trough and Georgina basins. The Group believes that GTL is probably the best option to monetise gas from central Australia under the current gas pricing regime but will keep an open mind to alternatives.
FARMINS / FARMOUTS
Petroleum Exploration Australia Limited ("PXA"):
PXA continued as a joint venture partner with a 20% participating interest to be funded at the 40% level in accordance with the terms of a formal farm-out agreement executed on 15 February 2008. The terms of the farm-out agreement include the funding by PXA of 40% of up to 3 wells and 40% of up to $3 million of seismic for PXA to earn a 20% interest in the permits and permit applications operated by the Company.
He Nuclear Limited:
He Nuclear has continued as joint venture partner with a 25% participating interest to be funded at the 50% level of exploration within the Mt Kitty (EP125) and Magee (EP82) Prospect Blocks.
Trident Energy Limited:
On 28 June 2007, Frontier Oil & Gas Pty Ltd signed a Memorandum of Understanding with Trident Energy Limited ("Trident") whereby the privately-owned Melbourne-based oil junior will fund a A$3 million seismic acquisition programme and the drilling of three exploration wells at the 20% level to earn a 10% interest in the Amadeus basin block EP 115.
Trident is focusing on risk reduction through the application of leading-edge exploration methods to high-grade seismically-defined prospect portfolios, particularly in modelling petroleum systems and high-tech geochemistry, including the "GoreSorber" technique. The Group has proceeded to prepare formal legal documentation incorporating the commercial terms of the Memorandum of Understanding.
The group is moving closer to execution of a formal agreement with Trident.
Other:
The Group continues with various discussions and preliminary negotiations concerning additional farm-outs, strategic stabilising investment relationships, technology based joint ventures and capital raising avenues.
MANAGEMENT CHANGES
Resignation of Mr Marco Di Silvio
Since the end of the 30 June 2008 financial year Mr Marco Di Silvio resigned as Chief Financial Officer and Company Secretary to pursue a career appointment overseas.
Appointment of Bernard Crawford
Mr Bernard Crawford joined the Company in August 2008 as Chief Financial Officer and Company Secretary.
FINANCIAL
During the quarter, the Group placed a total of 4,705,261 shares from the shortfall following the closure of the Non Renounceable Rights Issue raise a net total of A$685,452.
At the end of the Quarter, the Group had available funds of approximately A$8,210,000.
About Central Petroleum Limited
Central Petroleum Limited (
ASX:CTP) is a well-established, and emerging ASX-listed Australian oil and gas producer. In our short history, Central has grown to become the largest onshore gas producer in the Northern Territory (NT), supplying industrial customers and senior gas distributors in NT and the wider Australian east coast market.
Central is positioned to become a significant domestic energy supplier, with exploration and development plans across 180,000 km2 of tenements in Queensland and the Northern Territory, including some of Australia's largest known onshore conventional gas prospects. Central has also completed an MoU with Australian Gas Infrastructure Group (AGIG) to progress the proposed Amadeus to Moomba Gas Pipeline to a Final Investment Decision.
We are also seeking to develop the Range gas project, a new gas field located among proven CSG fields in the Surat Basin, Queensland with 135 PJ (net to Central) of development-pending 2C contingent resource.
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