White Sands yesterday requested a trading halt from the Australian Stock Exchange after saying it had been forced to dip into its cash reserves due to the “extended time and expense” at the Primero-1 well in Reid’s Dome permit PL-231.
The company will meet with partner Dome Petroleum Resources in London this week to consider alternative funding options.
Despite the blow-outs, partner VicPet said there had been “encouraging” results in the initial stages of Primero-1, which was drilling ahead at 1056m in the Reid’s Dome Formation primary target zone to 2700m.
VicPet said in a drilling progress update that a steady flare with estimated flow of 2.8 million cubic feet per day was reported in the Cattle Creek shallow gas reservoir.
It said Primero-1 would continue to drill into the deeper primary objectives in the Reid’s Dome beds, underlying the Cattle Creek Formation, which have not been tested since 1954.
VicPet also said White Sands plans to begin a review of data obtained from operations at Primero-1 to assess the potential for economically viable development of the Cattle Creek formation within PL-231.
“If the assessment is encouraging, then WSP as operator of the PL-231 joint venture will identify the steps to be taken towards early commercial development,” it said.
“VicPet believes the Reid’s Dome anticline has the potential to contain a significant gas resource, subject to further drilling results.”
It is expected that White Sands and Dome Petroleum will reach their funding decision in about 10 days.
Dome Petroleum paid the budgeted cost of drilling Primero-1 upfront and has now agreed to arrange further financial support to White Sands and the joint venture.
This financial support would allow the JV to complete the well with a flow test of the Cattle Creek shallow gas reservoir.
One possible solution would be for Dome Petroleum to buy and lease back the fully automated EDM WSP Rig-1, according to White Sands.
Participants in Primero-1 and PL 231 are VicPet (40%), Dome Petroleum (40%) and operator White Sands (20%).
