The acquisition is a 10% farm-in with, Santos Limited, on offshore Carnarvon Basin exploration tenement, WA-208-P, 100 kilometres northwest of Dampier.
The farm-in paves the way for Beach Petroleum to participate in the drilling of oil wildcat, Hurricane-1, in the first quarter of 2005, in waters 56 metres deep and 11 kilometres to the west of the producing Legendre oilfield.
Beach will also be a 16.7% participant in the drilling in February next year of another Carnarvon Basin well, Corowa East-1, located in WA-264-P, some 260 kilometres to the south of WA-208-P and in which Beach is in joint venture with Santos and Kufpec Australia Pty Ltd.
The Hurricane-1 involvement is Beach Petroleum's fourth foray this year into offshore oil and gas exploration under the Company's strategy to increase its exposure to higher reward plays.
The Company announced earlier this week that it had entered into an agreement with Essential Petroleum Resources Limited to acquire a 17.5% interest in offshore Otway Basin exploration tenement, VIC/P46, adjacent to the Portland coastline.
It also recently expanded its net 2P reserves by 5.8 million barrels of oil with a 25% farm-in the Basker, Manta and Gummy ("BMG") oil and gas fields in the offshore Gippsland Basin – an agreement that also includes exposure to a net contingent gas condensate resource of 4.8 million barrels of oil equivalent.
This offshore impetus is in addition to Beach Petroleum's highly successful onshore production and exploration at its flagship assets in the Cooper-Eromanga Basins of southwest Queensland and far northern South Australia.
Beach Petroleum's Managing Director, Mr Reg Nelson, said the Hurricane-1 well will test an interpreted stratigraphic trap of sandstones within the Eliassen Formation, of Late Jurassic age.
"Hurricane-1 presents a moderate risk drilling opportunity with the potential to yield a significant addition to Beach's current reserve base of approximately 10 mmboe," Mr Nelson said.
"Mean potential recoverable reserves in the Hurricane prospect are assessed to be approximately 24 million barrels of oil (mmbbl), with a highside in excess of 50 mmbbl recognised.
"The prospectivity of WA-208-P could be significantly upgraded by success at Hurricane-1 as several other exploration prospects are identified within the acreage."
WA-208-P covers an area of approximately 1,300 square kilometres within the Lewis Trough of the Carnarvon Basin. Under the terms of the farm-in agreement with Santos, Beach will earn a 10% interest in WA-208-P by contributing a portion of the costs of the forthcoming Hurricane-1 well.
Hurricane-1, scheduled for drilling by the ENSCO-56 drilling rig, has a planned total depth of 3,200 metres and is expected to take approximately 14 days to drill and evaluate.
Following completion of the farm-in, participants in the WA-208-P Joint Venture will be: Woodside Petroleum Ltd 34.03%
Santos Ltd 11.46%
Santos Offshore Pty Ltd 19.85% (Operator)
Eni Australia B.V. 18.66%
Beach Petroleum Limited 10.00%
Mosaic Oil NL 6.00%
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