A major stake in a Timor Sea oil field discovered by BHP Petroleum has been acquired by Adelaide-based oil and gas explorer and producer, Stuart Petroleum Limited.
In an $85 million venture announced today, Stuart will solely fund the drilling of an appraisal well on the Oliver oilfield, 700 kilometers west of Darwin and 30 kilometers north of the Jabiru production licences.
The Company will also undertake all engineering studies up to a Final Investment Decision (FID) authorising development, to earn its 50% interest in Oliver. Drilling of the Oliver-2 appraisal well, and the associated engineering studies, is expected to cost around $60 million. The sale agreement also commits Stuart to then additionally sole fund the first $25 million of development expenditure for the field.
Stuart will examine a range of funding options including debt and equity to fund these initial project commitments, and is targeting maiden production from Oliver by the end of 2011.
The Oliver interest is being acquired from a proportional selldown by a range of companies controlled well known and respected Melbourne-based petroleum entrepreneur, Geoff Albers, whose Albers Group is one of the largest independent holders of offshore petroleum permits in Australia.
Stuart assumes Operatorship of the Oliver field in the Australian-administered section of AC/P33 in the Timor Sea Permit, from Auralandia NL. BHPB discovered a 170-meter column of oil, gas and condensate from 2,927 meters depth in the Oliver-1 exploration well in 1988 – the field remaining undeveloped since due largely to then historic low oil prices.
Today’s announcement is the second offshore expansion by Stuart this year – with the Company to commence drilling next month, as Operator and 50% farminee, on the 100 million barrel five zone Bazzard-1 oil well in the Gippsland Basin, its first move offshore.
"What differentiates our new Timor Sea holding from our Gippsland activity is that Oliver is a new field ready for immediate development, not an exploration play," said Stuart Petroleum's Managing Director Tino Guglielmo.
"The acquisition is a very deliberate strategy to evolve and expand our maiden offshore portfolio in a manner best able to deliver near-term production balanced with exposure to significant exploration upside," he said.
"Our own interpretation of Oliver, validated by subsequent independent review, of recently acquired 3D seismic over the Oliver acreage, has resulted in estimated recoverable liquids in the range of 9.9 million barrels to 33 million barrels of oil and condensate, with a mean volume of 19.3 million barrels. Stuart’s share totals 9.6 million barrels.
"On this basis and with this focus, Stuart should now be viewed as an exploration and production company transitioning to primarily an offshore Australia intent for future growth in our exploration and development activities."
Semi-submersible rig contracted
Guglielmo said Stuart had commenced studies to identify development alternatives for Oliver, to be followed by the drilling of Oliver-2 to confirm the size of the field. The Company has contracted the semi-submersible drilling rig, Songa Venus, currently working the North West Shelf area, to drill the appraisal well in mid to late 2009. He said any production from the Oliver field would likely be a subsea development. The original discovery was made in the Plover Sandstone Formation with a 3,500 meter well drilled in a water depth of 305 meters.
Equity participants in AC/P33 will now be:
Stuart currently has reserves of around 2.6 million barrels of oil and in calendar 2007-2008, produced 570,000 barrels of oil to generate revenue of A $60 million – all from 11 fields and 24 wells in the Cooper/Eromanga Basin.
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