Valhalla-1 Exploration Well Spuds

ARC Energy says that operations at the Valhalla-1 exploration well, located in the onshore Canning Basin Permit EP 371, commenced, using the Century 18 drilling rig.

Valhalla-1 is located approximately 150km SE of Derby and 47km north of the Noonkanbah community. Valhalla-1 is located just to the north of the Noonkanbah determined land, in the same area as the recently completed 495 kilometer Paradise 2D seismic survey, which did extend onto Noonkanbah lands. Noonkanbah is remembered for the dispute that began in the 1982, when Fitzroy River 1 was drilled near the "goanna dreaming" site of Pea Hill. ARC announced on 25 July that ARC and the Noonkanbah people have signed a landmark heritage agreement that will ensure any activity by ARC is carried out in a socially and environmentally responsible manner.

Valhalla-1 is the second major play type to be tested in the ARC Energy regional drilling program. The well will test multiple fault independent structural closures that could contain oil or gas or both. The primary reservoir objectives are sandstones in the Grant Group and Anderson and Laurel Formations similar to the sections in which gas and potentially oil were found in the recent Valentine and Stokes Bay wells. There are also significant upside volumes at each of these levels if fault dependant closures are effective. The Valhalla trap is a series of rollovers on normal faults parallel to basin bounding faults superimposed on a large plunging fold (Tullock Nose).

Valhalla-1 will intersect objective Grant sandstones as shallow as 670 meters, the Anderson sandstones near 1745 meters and the Laurel reservoirs below 2685 meters. The proposed total depth of 3500 meters is based on the deepest penetration of potential reservoirs still in closure. Managing Director's comments:

"We are delighted to be spudding the second location in our Canning Basin program. The first wells at the Valentine/Stokes Bay location were extremely encouraging and we have successfully busted the first Canning myth with the Stokes Bay reef play. The Valhalla well will give us the chance to bust another myth or two if we are successful. We are particularly pleased to be drilling in an area where our friends from Noonkanbah will have the chance to also benefit if we are successful. Having 100% equity in the project as we have for the next couple of wells also gives us substantially more flexibility and leverage than we had at Valentine/Stokes Bay."