As operator, Arc is now preparing to run production casing.

Arc said the primary target, the Dongara Sandstone, was encountered at an expected depth of 1,709 metres and was interpreted to have good reservoir quality. The company said interpretation of wireline data indicates the original oil column in the Dongara Sandstone was encountered as prognosed.

But interpretation of the pressure and fluid sampling data was unable to conclusively determine whether the oil saturations were too low to be economically viable for production, Arc said.

“Consequently, it is intended to complete the well and conduct a long term production test of the Dongara Sandstone reservoir as soon as practicable,” managing director Eric Streitberg said.

“In addition to the hydrocarbons encountered in the Dongara Sandstone, strong oil and gas shows were noted in the Arranoo Sands above the Dongara Sandstone. These sands will also require a long term production test to determine their economic viability and this will be commenced as soon as practicable after the Dongara test.”

Streitberg said this result validated the structural mapping of the Dongara Field using the new 3D seismic data set from the Denison survey. He added this was a major advance over previous attempts to properly image the field in depth.

“Using the new data, the well was drilled targeting the oil column in a position interpreted to have been protected from water influx when the gas was produced from the field,” he said.

“Although it appears there has been water influx into the reservoir, we may still be able to produce oil, and we need to give it a good pump test to see whether there is any moveable oil still there.”

Streitberg said the presence of an apparent oil column in the Arranoo sandstone was welcome, but unexpected. It was interpreted to be in a separate pool to that drained by the existing Arranoo producers.