The report commissioned by ResourceInvest Pty Ltd claimed that if the Pritchard-1 wildcat in PEP 151 found oil, this could add 84 cents to each share upon discovery of oil. The prospect is wholly owned by Essential.
“We believe Pritchard is a higher risk prospect given the lack of nearby oil discoveries, but is justified by its high reward,” the report said.
The Pritchard prospect is a fault-independent closure that predates the main Tertiary hydrocarbon generation phase and provides a test of the Late Cretaceous section. An apparent flat spot associated with a deeper interpreted Flaxman Formation could be a direct hydrocarbon indicator, according to the report.
The primary target, the intra-Belfast horizon, contains a potential recovery of 10 million barrels of oil or 17 billion cubic feet of gas. Additional targets include a smaller fault dependent closure with a potential 4 million barrels and a deeper Flaxman Formation target with further potential for 11 million barrels or 30 billion cubic feet of gas.
“We estimate that a 17bcf gas field discovery would be marginally economic to develop on its own, but with additional gas discoveries, could become one component in a regional gas development.”
Essential Petroleum will seek farminees to take a 50% interest in this prospect before drilling.
As well as Pritchard, the company is likely to participate in two onshore wells targeting oil and two offshore gas wells in the Otway Basin between next month and December 2006.
The earliest to spud will be the onshore Cowrie-1 exploration well in PEL 27 on the northern flank of the Penola Trough – a proven hydrocarbon province with five commercial gas fields and additional shows and recoveries.
Cowrie is a fault-dependent closure, with a high chance of hydrocarbon source, said ResourceInvest. Recoverable reserves range between 0.5 million and 4.3 million barrels.
Cowrie is due for drilling next month. The operator is Beach Petroleum (30%). The other partner is Origin Energy (50%).
Essential farmed into the project to earn a 20% interest. The report predicted that a discovery would add about 5c to the company’s share price.
Meanwhile, success at the offshore Fermat well in VIC/P46 could raise Essential’s share price 62c, according to ResourceInvest.
Essential has reprocessed past seismic as well as shooting 730 kilometres of 2D seismic in 2002. Fermat, which contains a potential 1.1 trillion cubic feet at its primary targets and an additional 1.4TCF in other targets, was one of the leads identified by the seismic.
With drilling due before 2007, the company is seeking a further farm-in partner to reduce its 57.5% interest to 32.5%.
The Fermat prospect lies on Normanby High – a northwest trending titled fault block structure.
In addition, Essential hopes to negotiate farmouts for its offshore permit VIC/P50 prior to drilling one well at the end of next year.
The permit extends over the continental slope in water depths from 200 metres to over 2000 metres, in which the company is seeking to identify deep-water blanket or sheet-sand turbidite deposits.
“Although the play is untested in this basin, we believe it represents a legitimate target, albeit a high risk one,” said the report.
The report added that the company needed farminees to fund the drilling of Pritchard, Cowrie, Fermat and a VIC/P50 well.
“This introduces an element of financial risk to the company in addition to technical risk,” it claimed.
“We believe these farmouts can be achieved…The success of gas exploration in the offshore Otway Basin in the past three years has been significant with the discovery of Geographe, Thylacine and Casino gas fields, and highlighted again recently by the Henry gas discovery to the east.”
