The company aimed to build up a small fleet of ‘state-of-the-art’ automated rigs produced by Norwegian firm Engineering & Drilling Machinery (EDM) and to hire out these rigs in exchange for equity in exploration blocks.
In a time of rig shortages, it was an idea that made a lot of sense, and White Sands listed at a premium in January.
But very soon, it became obvious that the company was facing problems.
Even before White Sands had listed, PetroleumNews.net was contacted by industry professionals who maintained that the rig White Sands had imported as the foundation of its fleet was designed primarily as a workover unit, and no amount of reconfiguring was likely to make it capable of real exploration drilling.
In July last year, technical problems with the White Sands rig stalled the spudding of Gippsland Offshore Petroleum’s Patrobus-1 and Banjo-1 wells in the onshore Gippsland Basin. The two wells were spudded later that year using another rig.
At the time of its listing, White Sands said its rig would allow it to drill 15 wells in the next 14 months. But reality turned out to be very different.
By May, the company had still not fully commissioned the rig. Drilling of the unit’s first well, Primero-1 at the Reids Dome gas prospect in Queensland didn’t start until mid June, and even then it went very slowly and problematically. By mid August the well had reached only about 490m.
By October the well was still drilling ahead at more than 1500m, but the drillpipe became stuck in a section between 1200m and 1260m on three occasions.
The well encountered gas in several zones and was suspended.
This was explained in the company’s third-to-last ASX release. In November, White Sands issued a statement on a proposed annual general meeting to be held by January 19. Then on December 22, the company announced it had appointed an administrator.
“White Sands Petroleum has exhausted its cash reserves in achieving 20% ownership in PL 231 (Reids Dome) and carrying out extended flow testing of the shallow gas deposits intersected in Primero-1,” the company said.
“The directors have formed the view that investment to address the current liquidity problem may not come through and have appointed Jefferson Collins Joiner as administrators effective December 20, 2006.
“It is intended that the WSP Rig-1 be sold as a complete operating unit through a worldwide marketing campaign to repay the company’s creditors. The directors consider that a successful sale would see the debts cleared. The directors are also involved with several parties regarding substantial investment as a possible alternative to selling WSP Rig-1.”
White Sands currently owes $US1 million plus interest to AuDAX which was used to purchase the EDM rig.
White Sands and AuDAX were partners with operator Eagle Bay Resources in the PEL 182 permit in the Cooper Basin, South Australia. Eagle Bay has now signed a letter of intent with Century Drilling for the drilling of two wells with an option for a further two wells.
“Century Rig 3 will be available to commence drilling on 25 February 2007, subject to completion of prior drilling commitments,” AuDAX told the ASX yesterday.
