Great Artesian: Drilling Begins at Bellbird

Great Artesian Oil and Gas Limited said that it has been advised by Ausam Resources NL that the Bellbird West-1 exploratory oil well spudded early Tuesday in ATP 552 Surat Basin Queensland.

The Bellbird West-1 well is targeting a structure west of Bellbird-1 (drilled in 1984), which encountered oil and flowed at a modest rate of 30 barrels per day on test. Bellbird West-1 is fully funded by farminees. Following completion of drilling, Great Artesian will retain a 50% interest in the permit.

As part of the farmin agreement, the well will drill the main target zone using nitrogen under-balanced drilling techniques. Under-balanced drilling has been shown to inhibit formation damage and preserve the reservoir properties in some instances where water-based drilling muds might otherwise cause swelling of the constituent clays with consequential clogging of potentially porous and permeable zones. The expectation is that if oil bearing reservoirs, similar to those encountered by Bellbird-1, are penetrated using under-balanced drilling techniques a significantly higher flow rate might be achieved on production or test.

Under the farmout terms Rawson Resources Ltd will earn 50% interest in the Bellbird Block of ATP552P by funding 100% of the farmin well on the Bellbird West Prospect using underbalanced drilling techniques through the Permian reservoir section. Under a separate agreement Rawson intends to farm-down a 25% portion of its farmin interest to Ausam Resources NL, which is funding 50% of the cost of the well.

Ausam will operate the drilling operations. Initially the well will be drilled by ADS Rig #6 using conventional water-based drilling down to the top of the Permian coal measures. Two secondary reservoir targets are predicted during this first stage: the Evergreen Formation and Showgrounds Sandstone. Both are productive in adjacent oil fields. Once this stage of drilling is completed, a specialized coiled tubing unit will be mobilized to drill the remainder of the well using under-balanced techniques.

Stage 2 will see the well deepened to a total depth of approximately 2500m. Drilling of Stage 2 will probably commence in late August or early September. During this stage, the primary Permian reservoir target interval--equivalent to that which produced at Bellbird-1--will be evaluated. Potential recoverable reserves from the Permian objective alone for the Bellbird West Prospect range from 0.3 MMBO (P50) to 1.6 MMBO (P10).