President Petroleum Secures Rig in Otway Basin
President Petroleum has secured a suitable drilling rig to drill the Northumberland 2 exploration well in the Otway Basin, South Australia.
- Drilling contract signed with Ensign International Energy
- Northumberland 2 (President Petroleum 100%), the initial deep PEL 82 well, expected to spud no later than February 2011
- Northumberland 2 commences a drilling program targeting prospective hydrocarbon resources of 430 million bbls for the PEL 82 license.
- Contract includes an option for President Petroleum to use the rig for further exploration wells on PEL 82
Northumberland 2 Well
The Northumberland 2 well is located in the Otway Basin 3 km north-west of Port MacDonnell and will test the Flaxman and Waarre reservoirs. The combined prospective resources of these reservoirs at this location are assessed at 40 million barrels of oil or 55 bcf of natural gas and the well total depth is 3200 meters.
Landholder agreements have been completed and work on pad construction will commence shortly, weather permitting. Once underway, drilling is expected to take 30-40 days. The estimated well costs of US $6.5 million include substantial mobilization and demobilization costs. The Company has held extended discussions with other Otway Basin operators with a view to sharing these costs. These discussions will continue but in order to ensure the certainty of securing the rig and the drilling timetable, the Company will accept 100% of these costs if no sharing is possible.
PEL 82, South Australia
PEL 82, in which President Petroleum has a 100% working interest, is a highly prospective, on-shore, coastal license in the Otway Basin, South Australia. Over the past two years the Company has re-processed older 2D seismic and completed an 88 sq km 3D seismic program. The results of this have been evaluated by a number of geoscientists with extensive knowledge of the area, producing a highly positive assessment with total prospective resources of 430 million bbls for the license.
The key target reservoirs are the Flaxman and Waarre sands, and in total 10 traps have been identified. As the Waarre sands underlie the Flaxman sands, the Company has been able to identify three possible drilling locations which can test both sands from the same well, with the Northumberland 2 targets being the largest.
In addition to the structural traps identified by the 3D seismic, a large structural high with two structural closures has been identified in the north of the license. This large structure was not covered by the 2009 3D seismic shoot and, in addition to the drilling program, the Company is considering further 3D seismic to locate additional drilling targets.
The PEL 82 license was renewed last year and is currently in the first year of a new 5 year term.
Stephen Gutteridge, Chairman of President Petroleum, said, "The shortage of suitable drilling rigs in Australia and the consequent high costs of mobilization are significant problems for Otway Basin operators, but we are pleased to have secured a rig from Ensign for our initial exploration well on PEL 82.
"The Northumberland 2 well marks the beginning of the next phase of activity on PEL 82, aimed at converting the significant prospective resources into reserves and production. In addition to drilling activity, we plan to discuss further investment, such as additional 3D seismic, with the South Australian authorities."