In October, Innamincka commissioned a group of specialist consultants to review the drilling results, production test data and exploration potential of its operated petroleum exploration tenements – PEL 101, PEL 103 and ATP 543P South.

“Importantly, the consultants determined that the PEL 103 joint venture has already established recoverable reserves within two of the fields ready for commercialisation – the Flax oil field with mean reserves of 3.2 million standard barrels and the Yarrow gas field, with mean reserves of 22.8 billion cubic feet,” company secretary Leni Stanley said.

“It is the company’s view that the oil reserves provide a sound basis for the development of the Flax oil field.”

In addition, the consultants estimated in-place resources in the Juniper oil field totalled 65.8 million barrels, with a further 49 billion cubic feet in the Ginko and Crocus gas fields. The report also concluded the three tenements contained considerable upside potential for additional oil and gas accumulations, Stanley said.

“It is believed that in excess of 80 million standard barrels of in-place oil and 80 billion cubic feet of in-place gas have already been discovered and a detailed appraisal program is warranted to realise the potential value of the discovered resources,” Stanley said.

After reviewing the company’s proposed oil and gas development plans for the Flax field, the consultants made the following technical and commercial points:

· The Tirrawarra and Moorari oil fields are good analogies to the Flax oil field

· Development of Flax on a well spacing of 120 acres with gas injection is expected to recover mean reserves of 3.2 million barrels.

· It is likely the Tirrawarra Sandstone reservoir will produce an average recovery efficiency of 20% and the Patchawarra Formation at 15%.

· The recoverable method and development model appear reasonable, while the economic and input assumptions and costs appear realistic.

· Additional reservoir information and simulation studies are needed to optimise the development.

Meanwhile, the consultants said that while the Juniper oil field offered considerable oil potential, it was not sufficiently appraised to make a meaningful estimate of hydrocarbon efficiency.

“Accordingly, in light of the current information, the company’s direction in initially developing the Flax oil field and thereafter to progressively appraise and develop the Juniper oil field is endorsed as appropriate,” Stanley said.

“Similarly, progressive assessment and development of the gas potential recognised in PEL 101 and PEL 103 appears a logical sequence of development.”

But the consultants' review of ATP 543 South was less favourable. The report said the total unrisked mean in-place potential for the leads and prospects was 32 million barrels of oil, with a potential recoverable resource of about 11 million barrels.

However, it warned the permit was high-risk, because oil migration had not been demonstrated into this marginal part of the Cooper Basin.

Innamincka is the operator in all three tenements and holds the following interests: PEL 101 (37.5%); PEL 103 (35%); and ATP 543 South 50%.