(Continued from part 1)The Beharra Springs gas field in the Perth Basin currently supplies gas to Alcoa’s Kwinana alumina refinery.
AWE and its joint venture partners recently had success with the Beharra Springs North 1 exploration well. Pre-drill expectations of a recoverable 15 billion cubic feet of gas is likely to be exceeded and, subject to testing, could be brought online quickly to take advantage of under-utilised facilities at the Beharra Springs gas field.
A new exploration well is being drilled at Beharra Springs South with expectations riding on an additional 30 BCF of gas.
AWE will also participate in a further two wells (Arradale-1 and Cliff Head-1) in the Perth Basin over the next six months.
Mr Phillips said Cliffhead was a free carried 27.5 per cent interest and that the structure to be drilled had the potential to contain 120 million barrels of oil. Arradale has a potential to contain 50 million barrels of oil and AWE is farming down to a 30 per cent interest.
Wells like Cliffhead and Arradale are the type of ‘bet’ AWE wants to expose its shareholders to one or twice a year - high risk plays with the potential to deliver company makers.
Mr Phillips said success in the Perth Basin had the potential to increase the company’s current market capitalisation of $95 million three to four times.
AWE’s interests in the South Australian Otway Basin include a 23.2 per cent interest in the Katnook, Ladbroke Grove, Hazelgrove, Hazelgrove South and Redman gas fields and associated production facilities.
Gas is sold into local markets including a paper mill, potato chip factory and the township of Mt.Gambier. Following exploration successes in the Redman, Hazelgrove and Ladbroke Grove fields the contract to supply these markets has been extended to 2010.
In addition, gas is supplied to a power station operated by Origin Energy, adjacent to the existing Katnook gas plant. The power station was expanded to 80Mw in 2000, increasing demand for regional gas.
Offshore AWE has interest in New Zealand, Papua New Guinea and Argentina.
In July AWE announced the go-ahead for development of the Las Bases and Estancia el Colorado gas fields in the Neuquen Basin.
Sales are expected to commence early nest year and will add about $3 million a year to AWE’s revenues. AWE’s share of development costs for its 15 per cent stake in the project is US$1.7 million.
In New Zealand, AWE’s interests in the Taranaki Basin has targets ranging from 500 BCF of gas and 30 million barrels of liquids to one target the operator said could contain 700 million barrels of recoverable oil.
Such a large find is considered unlikely but a few hundred barrels would, once again, multiply AWE’s market capitalisation manifold.
In Papua New Guinea AWE has interest in the Papuan Basin, including a 14.3 per cent interest in the Elevala, Ketu, and Stanley gas discoveries.
The Elevala field is interpreted to contain a large reservoir of liquids rich gas. An oil leg may also be present.
The joint venture partners are currently seeking markets for the gas.
AWE’s offshore activities still have a considerable way to go to give it the title of an international exploration and development company but its Australian base is shaping up as the right mix to raise AWE into the second tier of local producers.
Yolla is a relatively low risk development and will be a good money spinner for the company, while its interests in the Perth Basin are in the outside running to deliver a big windfall for shareholders and achieve the original goal of bringing the company’s value to over the $500 million barrier.
AWE Corporate details
HEAD OFFICE:Level 9, 60 Miller St, North Sydney, NSW 2060. Ph: 02 9460 0165 Fax: 02 9460 0176 Email: awexp@awexp.com.au Website: www.awexp.com.au
DIRECTORS BG McKay, BJ Phillips, R Dumbrell,CC Green, C Jamieson, E Smith.
MARKET CAPITALISATION: (at the time of press) $90 million.
MAJOR SHAREHOLDERS: Premier Oil Australia Pty Ltd (21.21%), Citicorp Nominees Pty Ltd (6.95%), Citicorp Nominees Pty Ltd (CFS W/Sale GBL Res Fund A/C) (6.80%), Chase Manhattan Nominees Ltd (6.66%), Permanent Trustee Australia Ltd (5.57%), TNT Australia Pty Ltd (5.19%)
