Drillsearch Confirms Reserve Increase at Cooper Basin
Drillsearch has confirmed a major increase in the Company's Cooper Basin 2P/2C oil and gas Reserves and Contingent Resources. These upgrades in 2C Contingent Resources were confirmed by results of the Annual Reserves & Resources Audit Review conducted by independent experts, Gaffney, Cline & Associates Pty Ltd (GCA).
Drillsearch Managing Director Brad Lingo said the Company is extremely happy with the Annual Reserves & Resources Review with GCA and its' results indicate an opportunity to generate significant shareholder value as we work toward proving up our wet gas resources in the Western Cooper.
"We view the results of the independent review as an independent validation of our effort over the last year," Mr. Lingo said.
"This assessment gives us confidence to lock in significant gas sale arrangements and to commit to significant development expenditures," he said.
"Following this extensive and extremely thorough review, we have a great deal of confidence in moving forward to develop the Wet Gas Discoveries in the Western Cooper."
"The independent review clearly determined that the Western Cooper Gas & Liquids Project has a major resource base that supports a significant development project."
"The wet gas discoveries in the Western Cooper are very liquids rich and for every million standard cubic feet (Mmscf) of raw gas we can produce about 40 barrels of hydrocarbon liquids."
"If Drillsearch produced these wet gas resources at a rate of 25 Mmscf per day on a 100% basis we could generate net operating income from liquids sales of over $16 million per annum. With the Contingent Resource we have now established this is certainly within our reach."
"Our internal estimates give us substantial additional room to further increase the resource estimates signed off on by GCA."
"We are looking to undertake significant additional appraisal and development drilling over the next year to prove up and commercialise these resources."
"We see this entire process as a clear indication of Drillsearch's commitment to providing the investment community with high quality and transparent insight into the very things that underpin the value of the company – our Reserves and Resources."
"It is important to note that the decline in our 2P Reserves is simply a reflection of the continued production from the Tintaburra Block joint venture (JV), our divestment of the Naccowlah Block 2% JV interest and the impending sale our Canadian operations – both of which we consider non-core.
"With the Chiton Oil Field coming online and the imminent 5-well exploration program in the Western Flank Oil Fairway we are quite optimistic about offsetting any decline."
Drillsearch and JV partner, Beach Energy, hold a common view on how the Western Cooper Gas & Liquids Discoveries should be developed and that it will present a commercially attractive project.
The JV is now planning for the development of the Western Cooper Wet Gas discoveries, based on the encouraging results of the recent testing program.
"Once we bring the Wet Gas discoveries into production the Company will be on track to delivering our goal of sustained 2P Reserve growth."
Major Increase for the Western Cooper Gas & Liquids Project
Drillsearch previously announced the significant increase in 2P Reserves for the Western Cooper Gas & Liquids Project, based on the advice from Beach Energy as operator of PEL 106B. Beach advised that it considered the Middleton, Brownlow, Canunda and Udacha discoveries to be commercial and justified for development.
In connection with this declaration, Beach had advised Drillsearch that these discoveries collectively contain 2P Reserves of 5.6 MMBOE. Using the Beach estimates, Drillsearch's share in these discoveries is approximately 2.95 MMBOE of which 1.05 MMBOE are liquid hydrocarbons (condensate and LPG).
Following the completion of the annual review, GCA has estimated that the current discoveries in the Western Cooper Gas & Liquids Project collectively contain gross 2C Contingent Resources of 18.0 MMBOE with Drillsearch's net share 11.52 MMBOE.
The GCA annual review has established a significant increase in the Contingent Resources for the Western Cooper Gas & Liquids Project.
With respect to the Middleton, Brownlow, Canunda and Udacha Wet Gas Discoveries, GCA has estimated these discoveries contain 14.80 MMBOE gross and Drillsearch's share of these discoveries is approximately 8.15 MMBOE, of which 2.18 MMBOE are liquid hydrocarbons (condensate and LPG).
Wet Gas Discoveries development – a clear pathway to Reserves
Although GCA has advised that it still considers the Wet Gas Discoveries in the Western Cooper Gas & Liquids Project to be Contingent Resources pending development, GCA has advised Drillsearch that it expects to categorise the fields as Reserves when gas and liquid sales agreements are in place and development plans are approved by the JV.
In that event it is anticipated that volumes currently categorised as 1C will become 1P and 2C will become 2P etc., with slight adjustments for economic limit tests. Drillsearch is working very closely with Beach to move the existing gas discoveries into production and believes that this can be achieved in the near term.
The Annual Reserves & Resources Review Process
This review is part of Drillsearch's Annual Reserve and Resources review process and its policy of supporting the Company's Reserve and Resources estimates with third party audit review and verification.
The review covers Drillsearch's principal production and development assets and focuses on the Eastern Cooper Tintaburra Block JV, the Western Flank Oil Fairway incorporating PEL 91 and the Western Cooper Wet Gas Project Area incorporating PELs 106A, 106B, 107 and PELA 513.
- Beach Energy Makes $31M in Annual Savings Through Merger with Drillsearch (Apr 27)
- Australia's Beach Energy Completes Merger with Drillsearch Energy (Mar 01)
- Australia's Federal Court Approves Beach Energy-Drillsearch Energy Merger (Feb 18)