3D Oil Preparing to Spud West Seahorse Appraisal Well

3D Oil's West Seahorse-3 appraisal/development well, in permit VIC/P57 in the Gippsland Basin offshore Australia, is expected to start drilling later this week. The well is in Bass Strait, approximately 5 kilometers to the west of the producing Seahorse Field.

The West Seahorse-3 well will be drilled using the West Triton. West Seahorse-3 will be followed by an exploration well, Wardie-1. Both wells will be drilled from the same surface location to reduce rig moving costs.

3D Oil Limited is the operator and 100% owner of the VIC/P57 permit.

The West Seahorse-1 discovery well was drilled in 1981, by Hudbay Oil Australia Limited. It followed the discovery of oil in the neighboring Seahorse field by Esso in 1978. The well intersected three separate oil accumulations with a potential fourth sand untested. The uppermost zone, within the top of Latrobe Group, flowed 1800 barrels of oil per day (bopd). The current interpretation of the West Seahorse field shows it to be substantially larger than interpreted by previous operators.

Furthermore the West Seahorse-2 well appears to be located on the edge of the field, suggesting that larger hydrocarbon intersections might be encountered higher on the structure. The neighboring Seahorse field has produced oil since 1990/1991 through a subsea completion connected to the Barracouta platform. A recent work-over of the Seahorse-1 well (2005) resulted in the well's return to production at 4000 bopd following a period of declining oil production. VIC/P57 is flanked to the south by several oil and gas fields including the giant Barracouta and Snapper gas fields as well as the smaller Golden Beach, Mulloway/Whiptail, Seahorse, Wirrah, Whiting, Emperor and Sweetlips fields. Four recent wells have intersected hydrocarbons in areas adjacent to VIC/P57: Longtom-2 and 3, Grayling-1 and West Moonfish-1.

Assuming successful delineation drilling, the development of the West Seahorse field will be undertaken to have first oil at the earliest possible date. On a stand alone basis the development will consist of an unmanned monotower producing from a single well with the potential for add-on including Wardie-1. The field is expected to produce for ten years. The well fluid will be exported to an onshore processing plant via eight inch pipeline. The produced solution gas will be dehydrated, recompressed and piped (via 2.5 inch pipeline) to the monotower for gas lift. The onshore facility will include crude stabilization, water treatment, chemical injection and utilities. The Company will also consider offshore tie-back to third party facilities.

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