Phoenix Project Drilling Update
- Phoenix South-3 well expected to commence in early 2018, rig contract in final stage of evaluation
- Phoenix South-2 insurance claim submitted, proceeds expected to fund most of Phoenix South-3 cost
- Dorado-1 well expected to commence in mid 2018 to take advantage of drilling program synergies
- Roc development work progressing to plan
The Phoenix South-3 well is being designed as a redrill of the Phoenix South-2 well that discovered gas and condensate at the top of the Caley interval (refer CVN ASX announcement on 19 December 2016 and 28 March 2017). The well is to be located within close proximity to the Phoenix South-2 well.
The Phoenix South Caley structure is estimated to contain a gross mean recoverable prospective resource of 489 Bscf of gas and 57 million barrels of associated condensate (being 143 million barrels of oil equivalent ("boe"), gross, Pmean) - Refer to ASX Announcement on 28 March 2017. This is a significant resource base and especially so when combined with the Roc resource.
The estimated condensate-to-gas ratio ("CGR") is very high which adds a great deal of value to the project. The CGR is based on surface gas sampling from a permeable section at the top of the Caley Sandstone encountered while drilling the Phoenix South-2 well.
The primary objective of the Phoenix South-3 well is to evaluate the Caley interval that the Phoenix South-2 well drilled into but was unable to drill through and evaluate. The Phoenix South-3 well design is being constructed to specifically allow for the evaluation of this Caley interval, unlike the Phoenix South-2 well where the design objective was to evaluate a broader range of reservoir intervals.
The successful control of the increased pressure encountered in the Phoenix South-2 well led Carnarvon and the Operator to submit cost recovery claims under their respective insurance policies. These claims are currently in the final stages of assessment by the insurance underwriters. A successful claim will result in proceeds from the claims covering the majority of the cost of drilling the Phoenix South-3 well.
The well will be drilled with a semi-submersible drilling rig. Quadrant Energy is in the final stages of evaluating tenders for this rig.
The Dorado-1 well is targeting multiple stacked reservoirs within the Caley interval. The top sand alone is estimated to contain a gross mean recoverable prospective resource of 545 Bscf of gas and 31 million barrels of associated condensate - Refer to ASX Announcement on 14 November 2016.
The Operator had requested and received tenders for a jack-up rig to drill the Dorado-1 well this year. With limited jack-up rig availability in the second half of 2017, it was determined that significant cost savings and more efficient well operations would occur by aligning the drilling of Dorado-1 with Quadrant Energy's drilling campaign next year. In addition to the above, Quadrant Energy and Carnarvon considered the importance of minimising exposure to the local cyclone season, typically starting late in the calendar year through to early in the new year. Accordingly, the Dorado-1 well has been rescheduled to take place in mid 2018. The current intention is to drill this well with a jack-up drilling rig.
The Joint Venture has commenced pre-FEED (Front End Engineering and Design) work aimed at determining the most robust concept for developing the discovered hydrocarbons in the Phoenix project area. This work includes detailed reservoir modelling at Roc in order to determine the ideal development of this structure. Based on this work, the northern extent of the Roc reservoir will be a focus to provide greater certainty on the gas and condensate resource and ultimately support the reclassification of volumes into the more robust Proved category for making a Final Investment Decision ("FID").
All of the development scenarios being progressed include options for the tie-back of future discoveries and appraisal resources. This flexibility includes the nearby and potentially larger Dorado and Phoenix South resources should they be matured to economic resources.
Carnarvon Petroleum 20%
Quadrant Energy (Operator) 80%
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About Carnarvon Petroleum Limited
Carnarvon Petroleum Limited is an oil and gas exploration company, listed on the Australian stock exchange (ASX:CVN), Frankfurt (FRA:CJB) and US OTC (OTCMKTS:CVONF). Carnarvon has an extensive acreage position in the North West Shelf of Western Australia that is designed to offer investors high alpha leverage to the energy sector. The company's near term focus is on maturing oil, gas and condensate discovered in its Phoenix project, with partner Quadrant Energy, and on bringing into production oil from the Buffalo field.
Carnarvon Petroleum Limited