The new joint venture--called "Redback"--is on a 393-square-kilometer 3D seismic data base covering a portion of a highly productive onshore Gulf Coast oil and gas trend in South Texas. This regional trend to date has produced some 1.2 billion barrels of oil and 6 trillion cubic feet of gas from near surface to 10,000 feet depth.
The objective of the Redback joint venture is to target the under explored prospective section below 10,000 feet depth covered by the Redback 3D seismic and well data base. A pilot geophysical interpretation program on the Redback 3D seismic data, has already recognized at least 7 good prospects in the 12,000 to 15,000 feet depth range with accompanying seismic attributes thought to reflect the presence of significant hydrocarbons.
A number of these prospects have multiple targets with high upside potential for both gas and oil as accompanying condensate.
One such prospect has the potential to contain recoverable reserves of up to 116 billion cubic feet of gas with 6 million barrels of oil (i.e., up to 152 billion cubic feet of gas equivalent), if oil and gas are present.
On trend with the Redback area prospects are "look a like" gas filled structures producing from similar target sections to those identified in the Redback prospects. Individual wells from these analogue gas filled structures have produced up to 10 billion cubic feet of gas plus 250,000 barrels of oil at high initial well production rates of up to 10 million cubic feet of gas per day with 300 barrels of oil per day.
The terms of the joint venture with Wandoo are Vicpet and Sun Resources will fund a six month evaluation of the seismic data at an all up total cost of US$360,000 for a first right of refusal on in any individual prospects generated within the Redback area to earn a combined 75% Working Interest by drilling a well on individual prospects on a non promoted "ground floor" basis.
With respect to the completion costs of successful wells, Vicpet and Sun Resources will for the first well only, contribute to 10%of Wandoo's 25% Working Interest (i.e., a 10% Working Interest) in the first well on any prospect to completion. Vicpet and Sun Resources share of production from any wells completed for production will each be 37.5%.
The joint venture aims to fast track exploration in the Redback Project area resulting in the drilling of the first prospect in December 2007. The Redback Joint Venture will expose Vicpet to a choice of quality prospects of various risked size potential on a ground floor basis.
Vicpet will reduce its drilling risk cost by farming out a portion of its current 37.5% Working Interest in individual prospects so as to retain a minimum 20.0% Working Interest in the prospect being farmed out.
John Kopcheff, Vicpet's Managing Director, said:
"Victoria Petroleum is pleased to be entering into another onshore Gulf Coast Joint Venture with the very experienced Gulf Coast exploration team at Wandoo Energy. Particularly so, as this follows on from our early success with Wandoo Energy in the ongoing Margarita Gas Exploration Project where we had 100% exploration success for the first three wells, with two wells now connected to the local sales pipeline system and flowing gas at 0.6 million cubic feet per day.
"Vicpet's participation in the Redback Gas Exploration Project is part of Vicpet's continuing strategy to build on its current interests in the Margarita Gas Exploration and Production Project and the Flour Bluff Gas Field in the highly prospective onshore Texas Gulf Coast area.
"Vicpet is also spending share holders gas exploration risk dollars in a highly prospective area where the well head gas sales price is US$7.30 per thousand cubic feet, some three times the Australian well head gas price of US$$2.30 per thousand cubic feet."
The participants in the Redback Joint Venture, and their respective interests through their wholly owned US subsidiaries, are as follows:
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