Planning Underway to Drill Roc-2 Appraisal Well Off WA in 2H 2016

Carnarvon Petroleum Limited (Carnarvon) provided Thursday this update following a recent meeting of the offshore Western Australia's permits WA-435-P and WA-437-P joint venture partners and Carnarvon’s appointment of RISC to independently audit the WA-437-P Roc structure contingent and prospective resources estimates which have been volumetric defined. RISC’s report summarized in Table 1 is consistent with the resource estimates recently presented by the Operator, Quadrant Energy to the joint venture partners.

Table 1: Gross Volumetric Estimates* for Gas and Condensate in WA-437-P

  • Contingent Resource
    • Recoverable gas (billion standard cubic feet or Bscf): 1C - 42; 2C - 270; 3C - 372
    • Recoverable condensate (million stock tank barrels or MMstb): 1C - 2; 2C - 13; 3C - 18
  • Prospective Resource
    • Recoverable gas (Bscf): Low estimate - 87; Mid or best estimate - 193; High estimate - 328
    • Recoverable condensate (MMstb): Low estimate - 4; Mid or best estimate - 9; High estimate - 16

Note: Totals have been estimated using probabilistic methodology; Carnarvon has a 20 percent equity interest in these resources
*Refer to cautionary statement in the report (page 4) relating to estimates of contingent and prospective resources

Carnarvon Managing Director and CEO, Adrian Cook said, “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 (refer Table 1) 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 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.

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.”

On Jan. 4, Carnarvon announced that the Roc-1 well had discovered condensate-rich gas. The discovery was made in approximately 328 feet (100 meters) of water approximately 98 miles (158 kilometers) from Port Hedland. A gross hydrocarbon section of 131 feet (40 meters) was intersected between 14,383 feet (4,384 meters) and 14,514 feet (4,424 meters) providing a net pay of approximately 43 feet (13 meters). Beneath the hydrocarbon bearing sands an additional 262 feet (80 meters) of reservoir quality sands were encountered. The Roc discovery has a total areal extent of around 17 square miles or 45 square kilometers (best estimate), with a vertical relief of up to 361 feet (110 meters). The Roc-1 well drilled the south-western flank of the structure in a down dip location and the additional sands are potentially hydrocarbon bearing up dip.

The Roc-1 well follows the Phoenix South-1 oil discovery drilled in late 2014, approximately 12 miles (20 kilometers) 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.

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 3.1 to 3.7 miles (5 to 6 kilometers) to the east of the Roc-1 well. The well has an estimated 80 percent chance of geological success with the extent to which the Caley sandstone reservoir is present being the primary risk. The reason for this assessment being that seismic data quality and resolution precludes geophysical mapping each of the individual hydrocarbon bearing sands at this interval.

One of the development scenarios considered by the Operator, for minimum economic field consideration, is a Floating Production Storage and Offtake (FPSO) vessel for condensate production and a sales gas pipeline to shore to supply the domestic gas market. In completing the initial economic assessment, the Operator allowed for a facility of a scale and nature capable of accommodating additional tie back of liquids and gas from nearby discoveries, prospects and leads.

Overall, while the potential in the region is significant, the exploration activities will be balanced with the appraisal of more certain resources capable of supporting a commercial hub development. The Roc discovery represents an attractive investment proposition with both its oil and gas income stream diversification.

The Roc prospective and contingent resources are within the WA-437-P exploration permit in the North West Shelf of Australia. The equity interest holders are:

  • Carnarvon Petroleum: 20 percent
  • Quadrant Energy (Operator): 40 percent
  • JX Nippon: 20 percent
  • Finder Exploration: 20 percent

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