Rift Oil to Start Drilling at Puk Puk-1
Rift Oil Plc ("Rift"), the oil and gas exploration company with assets in Papua New Guinea ("PNG"), advised that drilling of Puk Puk-1 will commence on 10th May 2008. This is a major milestone in the development and exploitation of the Douglas gas discovery area in PPL 235, PNG, via its wholly owned subsidiary, Foreland Oil Limited. Flow testing will follow leading to an assessment of the size of the field. Depending on drilling and testing progress, the results of Puk Puk should be known in June and of the Douglas-1 flow test in July.
Puk Puk-1 is Rift's second well in this drilling phase. The Company's independent expert has advised that this exploration target has a mean recoverable resource of 226 BCF gas in the event of success, and that the Douglas discovery, Langia and the un-risked prospects in PPL 235 are estimated to have a most likely potential recoverable resource in the order of 800 BCF with the possibility of up to 1.3 trillion cubic feet recoverable, in the event of success.
The Department of Petroleum and Energy ("DPE") of PNG has approved Puk Puk-1 as an obligatory exploration well, which is a separate structure located 25 kilometers from Douglas-1.
The Douglas discovery was made in May 2006. In March 2007, Rift and its joint venture partner, Austral Pacific Energy Limited ("Austral"), signed a non-binding memorandum of understanding ("MOU") with Alcan to further investigate the supply of approximately 40 BCF per annum of gas to the Gove Alumina plant in Northern Territory, Australia for a period of 20 years following initial production. Supply is proposed to be via a direct pipeline from the Douglas discovery to Gove, subject to the joint venture establishing sufficient reserves. Under the terms of the tri-partite MOU, the joint venture stated its intention to carry out an active drilling program during the first six months of 2008.
More recently we have been approached by several parties offering alternative methods of gas delivery to the wider world market. Discussions are continuing with all parties but our first objective is to drill and test (if warranted) Puk Puk-1, and flow test Douglas-1, to quantify economic reserves.
Rift has been pursuing Austral for its share of the costs of the agreed minimum work program and remains in discussions to amicably resolve the current dispute however, regrettably Austral is in default of the outstanding AFE's, currently totaling some US$2.9 million, and Rift is pursuing its legal rights to recover this through the New Zealand High Court.
Rift has sufficient funds to cover 100% of the costs of drilling and flow testing of Puk Puk 1 and the flow testing of Douglas 1 and will therefore continue the program.
Ian Gowrie-Smith, Chairman of Rift, commented, "The start of drilling is a major step forward as it will rapidly lead to a more accurate estimation of the size of the field and its valuation. We have high hopes that Puk Puk will prove to be a significant discovery, and that the flow tests from it and Douglas-1 will confirm reserves to the standard required for a supply agreement which will transform Rift."
- Rift Gets Extension for Petroleum Prospecting License in PNG (Aug 03)
- Rift Oil Completes Gas Pipeline Study for PNG Licenses (Apr 15)
- Rift Oil Upbeat on Positive Flow Test at PNG's Puk Puk-1 (Mar 31)