Basker, Manta Fields Provide Healthy Production for Anzon Energy

Anzon Energy reported that oil production from the Basker and Manta fields (100%) during the first quarter averaged 8,893 barrels of oil per day. This is after including the logistical downtime during the two periods when crude was sold to a Melbourne refinery.

In the first quarter 2008 the BMG Joint Venture sold approximately 817,000 barrels of crude oil to a Melbourne refinery, resulting in approximately US$78 million in gross sales revenue with an average realized price of approximately US$104 per barrel.

The Basker-6 well was spudded with the Ocean Patriot on 6 March 2008 using the rig the Ocean Patriot. On 28 March 2008 work was completed on the wire-line logging and pressure surveying (MDT) to evaluate the Intra-Latrobe sands. The well's objectives were approximately 40 meters low to prognosis and all sands encountered were intersected below their individual sand hydrocarbon/water contacts. Pressure data however provided encouraging information supporting hydraulic communication of these sands across the field. This was a positive result as it indicated that the Basker sands are more continuous and extensive than previously thought. A decision was made by the BMG Joint Venture parties to sidetrack (ST) the well a short distance of 380 m to the north east and drill the Basker-6 ST1.

The Basker-6 ST1 commenced immediately after the Basker-6 logging results. The sidetrack completed all logging and pressure survey evaluation on 15 April 2008. The well encountered oil in five sands, four of which had been seen in other wells in the Basker field and one new sand in the upper Intra Latrobe. This well was successful in proving up the South Eastern extension of the Basker field and the potential for additional hydrocarbon reserves in a new, shallower oil pool. The well has been completed using a three packer, multiple zone intelligent completion, which allows each zone to be controlled by isolation. The well is scheduled to be tied into the existing facilities in July 2008 with first production soon thereafter.

The BMG Joint Venture has also secured a drilling rig, the Kan Tan IV, for its 135 day drilling program. The drilling program is expected to commence in early 2009, with a combination of development, appraisal and exploration wells.

During the quarter Anzon completed reprocessing the 3D seismic over the BMG license areas. Together with the results of the Basker 6 ST1 well, Anzon is upgrading its assessment of the known resources of the license areas, in readiness for the expanded, facilities for oil and gas, expected to be in place by first quarter 2010.

Oil production for the quarter amounted to 808,321 bbls, an average daily production rate of 8,883 bopd. This is after including the logistical downtime during the two periods when crude was sold to Melbourne refinery.

As reported in the 30 September 2007 quarterly report, the BMG Joint Venture decided to delay the Final Investment Decision ("FID") for the gas phase and optimise the oil development. Oil production is the major source of profitability for the project and is the first priority of further development activity. Accordingly the BMG Joint Venture remains fully committed to the oil development expansion.

In regards to the expanded oil development, Anzon has announced that the BMG Joint Venture has secured a drilling rig, the Kan Tan IV, for its 2009 drilling program. The Kan Tan IV contract provides 135 days of rig time starting in early 2009 with which to drill a range of wells that are likely to include additional Basker oil wells, gas delineation and exploration wells. Access to the Kan Tan IV is via a consortium agreement with other oil companies operating in Australasia and is expected to provide the opportunity for additional drilling in 2009.

As part of the overall expanded development, the BMG Joint Venture is continuing to assess the merits of committing to a larger FPSO (to replace the existing FPSO and shuttle tanker) to accommodate an optimal oil development ahead of a revised gas development plan.

The BMG Joint Venture holds three production licenses in the Gippsland Basin. Oil production commenced from VIC/L26 initially in 2005, with the Full Field Development coming on line in December 2006. VIC/L27 and VIC/L28 provide for the development of the known gas resources and exploration of further hydrocarbon potential in the acreage.

Potential exists for additional hydrocarbon accumulations in the intra-latrobe formations within the company's production licenses. Geophysical and geological studies by Anzon have identified at least 4 leads which are presently being matured for potential drilling in 2009 or later. Reprocessing of the 1996 Basker-Manta 3D seismic survey has been completed and is being used to mature the leads previously identified.

On 23 January 2008, Anzon announced that it had received a superior proposal to merge with Nexus Energy Limited ("Nexus") and that its Board of Directors had unanimously resolved, in the absence of a superior proposal, to approve an offer by Nexus to acquire all of the issued shares in Anzon in exchange for Nexus shares or a mixture of Nexus shares and cash. Anzon has entered into a merger implementation deed with Nexus to effect the merger. Following the announcement of Anzon's support for the Nexus proposal, ARC informed Anzon that it had terminated its merger implementation agreement with Anzon, and as a result Anzon was required to pay a $4 million break fee.

During March 2008 Anzon drilled the Basker-6 appraisal well followed by the Basker 6 ST1 well. The sidetrack is being completed with the Ocean Patriot at present and planned to be tied into the existing facilities in July with first production shortly thereafter. Given the timing of receipt of this drilling information, Anzon, with the support of Nexus, adjourned the scheme meeting (which was scheduled to occur on 18 April 2008) to a date to be advised.

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