Carnarvon claims new major Australian oil discovery
THE BOWSER: Carnarvon Petroleum (ASX: CVN) announced a major oil discovery in the company’s Phoenix South-1 well in the North West Shelf in Western Australia.
Carnarvon claimed the discovery to be one of the most significant developments in Australian oil and gas in recent times.
Highlights of the discovery include:
Four discrete oil columns confirmed;
Six oil samples recovered with API gravity of 46 to 48 degrees (light oil);
Preliminary permeability estimates indicate potential productive reservoir; and
New oil province discovered where Carnarvon holds an interest in surrounding 20,000 square kilometres.
The company said that at it is too early to quantify the recoverable volumes of oil, however further technical evaluation of log and core data will enable Carnarvon and its partners to be in a position to declare that information by the end of 2014.
“Carnarvon is excited to be part of this major new oil discovery at Phoenix South-1,” Carnarvon Petroleum managing director Adrian Cook said in the company’s announcement to the Australian Securities Exchange.
“This is the most significant new oil play in the North West Shelf since the Enfield discovery opened up the Exmouth Basin almost 20 years ago.
“The implications on the rest of our acreage are still being assessed, but the potential is extraordinary.
“I’m very proud to be involved with the Carnarvon team in taking a very early position in this area with our initial partner, Finder Exploration.
“A great deal of credit for this discovery also rests with Apache Energy who is the operator of the Phoenix South-1 well.
“Despite some initial challenges and setbacks, this well has delivered a significantly better outcome than any of us could have imagined.”
Carnarvon said the cost estimate for the well to completion, including additional drilling, is within the guidance it has previously released, and that its net cost for this well is expected to be around $6 million.
Carnarvon indicated its reported cash holdings of $50 million as at 30 June 2014, saying this meant it is in a strong position to fund these costs.
The company believes the discovery of oil in the Phoenix South-1 well in WA-435-P has positive implications for the rest of the permit and the surrounding 20,000 square kilometres, of which Carnarvon is holding a material equity interest.
Work is currently underway to re-evaluate the previous Phoenix-1 discovery, and also the implications for the prospects at Roc-1 well in WA-437-P (Carnarvon 20 per cent) and other prospects in the adjoining acreage.
The technical work on this well and the basin wide work will take some time to evaluate to discover the full potential in this new oil play fairway.
Carnarvon said it has been formally notified by Apache Northwest and JX Nippon Carnarvon that both companies are committed to drilling the Roc prospect in WA-437-P in the North West Shelf of Western Australia.
In doing so they will pay the earn-in costs to a cap of US$70 million (gross).
Email: investor.relations@cvn.com.au
Website: www.carnarvon.com.au