Santos Finds Wet Gas at Yarowinnie South-1 Well in PEL 513 in Cooper Basin
Unconventional Business
In ATP 940 (Drillsearch 40 percent and Operator, QGC 60 percent), Drillsearch announces that eight of nine stages of the hydraulic stimulation of Anakin-1 have been successfully completed. The ATP 940 joint venture will now begin production testing, commencing with Charal-1 in late December, with Anakin-1 to follow.
The fourth well of the current program, Amidala-1, was spud Nov. 20 and had reached 7,896 feet (2,407 meters) as of Dec. 11. The well is expected to reach total depth in late January 2015.
The company also advises that the ATP 940 joint venture has recently received confirmation of the two-year extension of the permit from the Queensland Department of Natural Resources and Mines, to November 2017 from November 2015. This extension provides additional time to enable the joint venture to continue with its measured approach to the work program.
Market Conditions
Oil prices in the financial year to-date have experienced material decline, with considerable ongoing volatility. While this decline has been partly offset by the relative weakening of the Australian dollar against the US dollar, the decline in oil prices naturally impacts on Drillsearch’s revenue.
Drillsearch remains in a strong financial position at current prices, with cash of approximately $140.5 million (AUD 170 million), high margin oil production and a $41.32 million (AUD 50 million) working capital facility which remains undrawn.
Despite the company’s strong financial position, during the December quarter Drillsearch took steps to mitigate the impact on the company of further oil price decline, which we have recently seen, in the form of put options at $70 a barrel. These put options, combined with hedging in place under Drillsearch’s undrawn working capital facility, result in the company setting a realised floor price of $70 a barrel (approximately 850,000 barrels) and $90 a barrel (approximately 450,000 barrels) for the financial year.
Drillsearch Managing Director Brad Lingo said: “The company’s strong cash position and robust margins provide Drillsearch with a platform to continue investing in growth, notwithstanding the volatile conditions. However, Drillsearch will scrutinize all capital expenditure, both in company-operated assets and in conjunction with its joint venture partners in non-company-operated assets, to ensure that its investment is prudent and scaled to the rate of success.”
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