Wellington-headquartered Austral said it had contracted Ensign Energy Services (formerly OD & E) Rig 19 to drill all the Cheal development wells, with the first scheduled to spud sometime next week at the Cheal B site where site preparation was almost complete.

Up to four wells would be drilled back-to-back at the Cheal B site, with all planned to intersect Miocene-aged Mount Messenger and Moki targets identified from the interpretation of the recently completed Brecon 3D seismic survey.

Following completion of the wells at the B site, the rig would move to the Cheal A site to drill a further two development wells.

As drilling starts at Cheal A, a program of continuous well testing will simultaneously begin on the Cheal B wells. Austral said it expected each well would take about 20 days to drill and complete.

As well as the drilling of new wells, workovers and re-completions of existing wells at the Cheal A site are scheduled to start in December. Long-term production testing from the existing Cheal-A4 well will continue to use interim production facilities, it added.

Austral said detailed engineering and design work for the processing facilities were underway, with foundation works starting at the Cheal A site and ongoing offsite fabrication of long lead items, including tanks and compressors.

Construction of processing facilities would start immediately after site preparation had finished, with commissioning of those facilities expected during the first quarter of 2007.

Production through the Cheal A processing facilities would start at about 1000 barrels of oil per day and Austral expected full production, of about 1900bopd, to be reached during the second quarter.

Meanwhile, Austral said work was continuing at the nearby troublesome Cardiff-2A well to determine the optimum production test of the Eocene-aged Cardiff K3E reservoir.

It has commissioned Aberdeen firm Fracture Technology to review all previous testing and fracture stimulation operations in the well and to recommend the design and planning of future testing operations. This input, together with the results of the Brecon 3D seismic and in-house reservoir simulation studies, will form the basis of the new testing program.

The Cardiff-2A sidetrack started in early 2005 but progress has been slow because of technical problems, formation water and zone isolation problems.

The PEP 38738-01 (Cheal) partners are operator Austral (36.5%), TAG Oil (30.5%) and Arrowhead Energy (33%).

The PEP 38738-02 (Cardiff) partners are operator Austral (25.1%), Genesis Energy (40%), TAG (15.1%) and International Resource Management (19.8%).

In addition, Austral said a 54km 2D seismic survey had been completed in Papua New Guinea licence PPL 235, where Austral and partner British firm Rift Oil made the possibly commercial Douglas oil discovery earlier this year. Processing of the data had already started.

The objectives of the survey were to mature the Puk Puk prospect to drillable status, to refine the estimates of the size of the Douglas discovery, and to optimise future appraisal drilling locations.

Operator Rift (65% equity) and Austral (35%) are soon to start a feasibility study investigating the options for commercialising the PPL 235 gas resource. Suitably qualified parties will be invited to tender for the study and Austral expects results to be available by the end of the year.