Oilex has signed a contract with Songa Offshore Drilling Limited to secure the services of the semisubmersible drilling rig Songa Mercur. The rig will drill two wells (with the option of one additional well) in the contract area JPDA 06-103 in the Joint Petroleum Development Area ('JPDA') of the Timor Sea.
The drilling contract is the latest in a sequence of recent events that will culminate in the drilling of two attractive offshore oil prospects in JPDA 06-103 including:
The portfolio of prospects in JPDA 06-103 comprises over 20 structural closures. Drilling locations have been selected for the first two wells on prospects with recoverable mean prospective resources (on 100% basis) of 195 million barrels of oil (Loré) and 90 million barrels of oil (Lolotoe).
The prospect portfolio was prioritized on the basis of potential resource volume and technical risk. While oil is the anticipated hydrocarbon phase based on nearest offset discoveries, the possibility also exists for significant gas condensate finds in the block. Conoco-Phillips' Bayu Undan gas condensate field is located about 40km to the south of JPDA 06-103.
JPDA 06-103 lies close to significant recent discoveries and prolific producing fields further to the west along geological trend. ENI's 2008 discovery at Kitan, located in the adjacent PSC to the west of JPDA 06-103, is now under development and wells and fields to the south and west of JPDA 06-103 have demonstrated exceptionally high productivity on testing oil. The Kitan-1 discovery well is reported to have flowed oil at a rate of 6,300 bopd from a drill stem test in the Elang/Plover Formation. The discovery was followed by an appraisal well, Kitan-2, that confirmed its commercial viability.
The Maura 3D seismic survey (2,140 km2), in combination with existing 3D seismic data in the block, provides 3D seismic coverage over about 90% of the contract area. The seismic data quality is excellent and the definition of events at the level of the top primary objective * the Elang and Plover Formation reservoirs -- allows for interpretation with a higher level of confidence than previously achievable using older seismic data.
Prospects were mapped in detail based on the integrated set of new 3D, regional 2D and older, reprocessed 3D seismic data and regional well data.
Under the terms of the Farm-Out Agreement, Oilex has agreed to assign 15% of its 25% interest in the block to Japan Energy E&P JPDA Pty Ltd, a subsidiary of Japan Energy Corporation. The consideration payable by Japan Energy is made up of two components: (1) a part refund of past costs incurred by Oilex in relation to JPDA 06-103; and (2) future funding of Oilex's remaining 10% share of the costs for the first two commitment wells up to an agreed cap.
Oilex will remain as Operator of the PSC.
A drilling contract has been concluded between Songa Offshore Drilling Ltd and Oilex (JPDA 06-103) Ltd on behalf of its Joint Venture for utilization of the semisubmersible drilling rig Songa Mercur. The contract covers a drilling campaign of two wells and the option of one additional well in the JPDA 06-103 contract area. The drilling rig is scheduled to mobilise for the Oilex Joint Venture, subject to meeting certain contractual requirements, immediately after release from its current contract with Woodside Energy Ltd, anticipated to be in November 2009 on the basis of Woodside's likely schedule of two wells.
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