Under a new farm-in agreement announced to the market yesterday, Phoenix, which is looking to list its securities on a UK stock exchange, has agreed to spend $800,000 towards the costs of drilling the Parrot-2 appraisal well. In return, it will earn a 25% stake in the exploration permit EP 435 and in production licence 1/04-5L, excluding the Rough Range Oilfield, which is currently under application.

Subject to approval from the Department of Industry and Resources, the EP 435 joint venture, which also includes Bounty Oil & Gas and Australian Oil, plans to drill the Parrot Hill-2 with DCA Rig 7 to a total depth of 1200 metres.

The same joint venture drilled the Dune-1 exploration well, which was plugged and abandoned after failing to encounter hydrocarbons.

Empire said the Parrot Hill-2 well site is on the Rough Range Anticline updip from the 1987 exploration drilled by Ampolex, which encountered a 6.2m gross oil column at the top of the Birdrong Sandstone.

Parrot Hill-1 well was subsequently completed as an oil well but never produced, and was later plugged and abandoned when Ampolex was acquired by Mobil.

Empire said the Parrot Hill structure is well defined by nine seismic dip lines and two strike lines. Recent seismic interpretation suggests the Parrot Hill oilfield extends to the southeast, which is where Empire proposes to spud the appraisal well.

Based on the same interpretation, the structure is estimated to contain about 750,000 barrels if it correlates to the prognosed oil water contact.

If successful, the Parrot-2 well, which is located about 64km south of Exmouth, would be tied into the existing Rough Range 1B production facility.

The EP 435 joint venture is the second time Phoenix has joined Empire, after agreeing in July to take a 30% interest in Canning Basin permit EP 104 by part funding the Stokes Bay-1 exploration well.