Stuart Petroleum Snags Operatorship of Timor Sea Permit
Stuart Petroleum Limited has become the Operator and 50% interest holder in Timor Sea permit AC/P33, host to the Oliver Oilfield development project. Permit AC/P33 is located approximately 700 kilometers west of Darwin in the Australian-administered section of the Timor Sea.
Stuart's subsequent earn-in obligations will be satisfied by sole funding the drilling of an appraisal well on the Oliver Oilfield, completion of engineering studies up to Final Investment Decision for development of the oilfield and sole funding the first $25 million of development expenditure.
The first phase of development of the Oliver Oilfield – drilling the appraisal well, Oliver 2 and completing engineering studies – is expected cost $60 million and to be complete late in 2010.
Stuart will review a range of funding options including debt and equity to fund the initial project commitments.
The Oliver field, containing a major column of oil, gas and condensate, was discovered by a BHP Petroleum operated consortium in 1988. The Oliver 1 well was drilled in 305 meters of water to a depth of 3,500 meters. The well encountered the column in the Plover Formation between 2,927 meters and 3,097 meters.
Stuart's interpretation of recently acquired 3-D seismic over the Oliver Oilfield has resulted in estimated recoverable liquids in the range of 9.9 million barrels to 33 million barrels of oil and condensate with a mean Joint Venture volume of 19.3 million barrels. These estimates have been independently reviewed and confirmed. Stuart’s share of mean Joint Venture volumes is 9.6 million barrels.
The impact on Stuart of its 50% holding in the Oliver Oilfield is illustrated on the attached graph, which shows an increase in Stuart’s share of liquids of approximately 370%. This graph also assumes no success from any of the Company’s exploration drilling in the Gippsland Basin or the Cooper/Eromanga Basin.
Studies to identify development alternatives have commenced and will be followed by the Oliver 2 appraisal well to confirm the size of the field. The semi-submersible drilling rig, Songa Venus has been contracted to drill this well in mid-2009. Further studies will then determine how best to develop the field.
Equity participants in Timor Sea permit AC/P33 are:
- Stuart Petroleum Limited (Operator) 50%
- Natural Gas Corporation Ltd 15%
- Auralandia NL 15%
- Alpha Oil and Natural Gas Pty Ltd 7.5%
- National Gas Australia Pty Ltd 12.5%
The transaction is subject to the usual transfer procedures. Acquisition of the Timor Sea development interest establishes a balance between Stuart's exploration interests in the Gippsland Basin and its onshore exploration and production interests in the Cooper/Eromanga Basin. With the Timor Sea permit acquisition, the focus of Stuart's exploration and development activities has moved offshore and, while exploration and production will continue in the Cooper/Eromanga Basin, the relative importance of the Company’s onshore activities is expected to diminish over time.
Stuart expects its Timor Sea and Gippsland Basin projects to establish it as a mid-tier oil and gas producer and explorer by providing the Company with the materiality and diversity it has been seeking.
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