One of the advantages of the smaller exploration company such as Arrow, is it's ability to pick over old acreage the majors have left behind, a strategy both mineral and petroleum junior explorers employ.
The Surat Basin, although sparsely explored by world standards, has been the target of such previous exploration. The major players determined there were more fruitful basins to chase when the Surat didn't live up to the potential of the nearby Moonie and Bowen Basins and left the remnants to the juniors such as Arrow, Icon, Queensland Gas (QGC) etc.
The hydrocarbon source potential of the Moonie and Bowen Basins lies in the Permian sub-basin, which was thought to be absent in the eastern Surat Basin - up until new seismic was acquired last year, explains Arrow managing director, Nicholas Mather.
"The whole survey was a real eye opener for us because it has defined a Permian sub-basin underneath the eastern side of the Surat Basin in the Horrane Trough," said Mather.
"The area structurally looks like an analogue of the Moonie and Bowen Basins off the east side of the Roma Shelf.
"There has been some 50 million barrels of oil and 500 billion cubic feet (bcf) of gas produced in the past by other companies so we know the Permian coal measure source and the Jurassic Precipice Sandstone reservoir is an extremely prospective and productive stratigraphic and structural coupling in SE Queensland. We look forward to the ultimate discovery of some significant oil and gas resources in this area," he said.
"We would like to shoot 100 line kilometres of vibroseis seismic to tighten up the Permian pinchout and Precipice rollover leads on the eastern side of the Horrane Trough," said Mather, and also, he said, to firm up the target for an impending well to test the play.
"We intend to have Broadwater Gully drilled, which is the largest of the prospects and leads we defined during the 175 km vibroseis survey late last year. Broadwater Gully is prognosed to have somewhere between 42 bcf and 300 bcf of gas potential and the target zone is located at about 1300m depth.
"The Horrane Trough previously had not been properly investigated. There's certainly no drill holes into it but we have found some stratigraphic indications in some of the wells around it that support the assertion we have that it's a Permian sub-basin and certainly the seismic character of it indicates we've got Bandanna and Tinowou coals in the Horrane Trough.
While Arrow continue on their search for conventional oil and gas plays, they have also followed up the coal bed methane (CBM) opportunities offered by the vast tracts of Queensland coal deposits.
"The area is also particularly interesting from the coal bed methane point of view and seismic has outlined a number of areas of enhanced seismic contrast we believe to indicate substantial Walloon coal packages possibly charged with extra gas out of the sequences below.
"We're talking to number of joint venture partners in respect of some aggressive coal bed methane programs in the Cecil Plains and Dalby areas," said Mather.
"The Walloon coal measures so far have had only a limited number of holes put in them and mainly by QGC in the Chinchilla area, and OCA, I believe, are starting to get some CBM holes into the Walloons in the Chinchilla area also.
"Most of those holes have flowed gas, some it has been free gas sitting on the Undilla Nose structure. Our farm-in with Australian Coal Bed Methane, run by Ron Prefontaine in ATP 676P which is just to the north of QGC's farm in area, means we'll be getting five CBM holes into that area commencing next month," he said.
"We're very sure we'll be getting some gas flows out of the holes immediately south of Chinchilla. We're only a newly emerged junior but we do have some pretty serious upside in terms of oil and gas potential close to the Brisbane market.
"The drill holes in ATP 676P will cost overall around $60,000 each. There will be five of them so it will be a $300,000 program. That will earn us 25%. We then drill another five holes and that gets us up to 50%," explained Mather.
"The advantage of the holes in 676P is that there is abundance of free gas out there so dewatering them may not be an issue in the short term. In the Clarence Morten Basin project (ATP641P: 40% and 643-644P: 33.3%) close to Brisbane we drilled two holes. We didn't discover any gas in them but we got some very weak shows in Amberley-1, which was just west of Brisbane, and Ipswich.
"What we did discover is that there are some extremely porous and permeable sandstone units in the Marburg formation. The whole area requires a careful look at some of the geological and other stratographic relationships," said Mather.
The results of that careful look will be known in a few months. Arrow said they had a total of nine coal seam methane holes they are planning to drill in ATP683P and the ATP676P Chinchilla farm-out area, in the next quarter.
Relationships with the Queensland exploration and business community are very good, given the Arrow board seats some heavyweight resources names. Bob Day was the director general of the Queensland Department of Mines and Energy in the late 1990s and the senior author of a number of definitive texts on Queensland's geology.
Chairman Bill Stubbs is a lawyer with over 30 years of experience with publicly listed exploration and mining companies. Executive director Stephen Bizzell is a specialist in corporate restructuring, debt and equity finance and merger and acquisition work while executive director Nick Mather completes the board.
Arrow Energy ... at a glance
Office:
Level 30, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
Australia
Telephone: +617 3229 4766
Facsimile: +617 3229 8662
Directors:
William Robert Stubbs, Dr Robert William Day, Nicholas Mather, Stephen Grant Bizzell.
Market Capitalisation
$4 million
