ACOR Raises Funds to Develop Longtom
Australian-Canadian Oil Royalties Ltd. (ACOR) said that the operator of VIC/P54 has secured $AUS160,000,000 to fund the development of the Longtom gas project on ACOR's ORRI. The first gas from the Longtom project is forecast for the third quarter of 2008, estimated at approximately 11,000 (BOE) barrels of oil equivalent per day. The operator has also submitted its Longtom Gas Field Final Development plan and applied for a production license with the relevant government authorities. The operator anticipates award of the production license to be forthcoming during the third quarter 2007.
The pipeline installation and the drilling of an additional well are scheduled for the first half of 2008 in order to meet the first gas production target. Gas from the Longtom field on ACOR's ORRI will be produced via sub-sea wells linked by a new 12" pipeline to the Santos owned and operated Patricia/Baleen gas facility.
Gas Sales and Processing Agreements
Contracts to process and purchase up to 318 BCF of gas and associated liquids from the Longtom field have been revised to accommodate the financing arrangements with the operator's current financiers. All key commercial terms for the revised gas sales agreement remain unchanged from the agreement signed with Santos in December 2005. Under the agreement the operator will deliver raw gas from the Longtom field to the Santos owned and operated Patricia/Baleen gas processing plant near Orbost. Santos will process and purchase the processed gas and associated liquids. Santos has agreed to process up to 409 BCF of raw gas from Longtom and purchase the first 318 BCF of the sales gas at defined prices. The agreements are subject to regulatory approvals relating to the project. Santos also has an option to acquire up to 35% interest in the Longtom project.
The original Longtom-1 discovery well intersected a 1312 foot gas column in the Emperor formation. This was confirmed by the Longtom-2 appraisal well drilled by Apache Energy Limited ("Apache") and the operator in late 2004, which intersected a gas column in excess of 1312 feet long in five separate reservoir zones.
The Longtom-3 well drilled in September 2006 by the operator on a sole risk basis, confirming the commercial potential of the Longtom field when a sustained flow rate of over 75,000,000 cubic feet of gas per day was achieved during the second production test over the field's lower reservoir sections. These lower reservoir sections contain over 80% of the hydrocarbon volumes in the Longtom field. A test of the upper reservoir sand which did not flow in the Longtom-2 well also confirmed the capacity of this sand to flow.
A second objective in the VIC/P54 permit is the Longtom Upper prospect, a lead which represents a possible extension to the Longtom field containing up to 250 BCF of additional gas which will be tested by a future exploration well.
VIC/P54 is located is located in the Gippsland Basin in the Bass Strait and is one of four properties covering 927,199 gross acres under which ACOR holds ORRI's.
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