Cooper Energy reported a record profit for the last financial year with trebled oil sales, no debt and cash reserves that rose 78% to reach $22.1 million.
Strong results indeed, but Cooper isn’t satisfied. The ambitious junior has decided that the Cooper Basin is unlikely to produce a company-making discovery, so it is now looking overseas at undervalued markets that offer low-cost, low-risk entry programs.
“When I joined Cooper in February 2004, we discussed where we wanted the company to go,” said chief executive Michael Scott, a Scottish petroleum engineer with more than 20 years experience in the oil and gas exploration and production industry.
“We decided we should aim at having a market cap of half-a-billion dollars and reserves of 50 million barrels. But we realised that if we were going to achieve this goal we would have to expand outside the Cooper Basin."
Cooper closed its Adelaide office and hired new staff with first-hand experience of the geology and business environments of North Africa and South East Asia.
“I could see countries in North Africa and South East Asia that could offer Cooper Energy good opportunities, but it took about 12 months from the start of looking for opportunities to actually doing deals,” Scott said.
But when the deals started, they followed in quick succession. In July, Cooper won a block in Tunisia; in August it confirmed a Cambodian deal; and in September it farmed into a highly prospective onshore block in Madura, Indonesia.
“The South Madura block is the jewel in the crown,” Scott said.
“It is on the same fairway as two major Santos discoveries – Jeruk and Oyong. It will be cheap to explore and develop, and it is close to major markets and refining facilities.”
Cooper has a 45% stake in the South Madura production sharing contract (PSC). The first onshore well in the PSC is expected to be drilled in this block in early 2006 following seismic processing and interpretation. The seismic work will also define the follow-up targets in the PSC at all play levels.
“There are two play levels,” Scott said.
“The Ngrayong sandstone level is 1400 metres and has already had a gas discovery in four-metre thick sands. This wasn’t tested as gas and was not considered economic at the time, but it could represent an economic gas field.
“The deeper play – the Kujung carbonate at 3500 metres – is more exciting. It could contain hundreds of millions of barrels if oil is present.”
Both the Kujung and the Ngrayong prospects could be tested by a single well, which would be the priority focus of the proposed exploration drilling program.
"If the exploration well is successful, there are several follow-up targets in the PSC at all hydrocarbon play levels," Scott said.
The permit covers a densely populated area and is close to Indonesia’s second largest city, Surabaya. So there are plenty of options for marketing any gas that might be found. Oil would also be easy to offload as Indonesia’s refineries are currently not working to full capacity, according to Scott.
