In January, Orchard became operator of the Southeast Lost Hills (SELH) project, acquiring additional acreage and working interest from US-based partner and previous operator Nahabedian Exploration Group.

The SELH project contains the Jack Hamar gas discovery and a deep Monterey formation oil discovery, on which testing began this year.

Orchard told the ASX this morning that the new work program for the gas development involves a three-phase approach. Firstly, the partners will thoroughly test the existing five completed gas wells and determine sustainable gas deliverability from the multiple potential gas intervals in each well.

Then they will install production facilities and complete a pipeline to an identified gas customer. Finally, they will continue to evaluate drilling opportunities and the best approach to develop the extensive acreage position.

“All these processes will help in a speedy determination of recoverable gas reserves from the shallow gas discovery,” Orchard said.

For the Monterey oil development, the work program will involve further testing of the Jack Hamar 1-1 well.

Oil production from the 1-1 well has already been established over one interval following single stage hydraulic fracture stimulation. Now additional zones covering more than several hundred feet each are to be tested.

“Part of the Monterey oil evaluation has included petrophysical research by Nuenco’s consultants over the area using available well data from nearby producing wells,” Orchard said.

“Their analysis indicates that the Monterey formation provides a larger target in terms of potential oil-in-place than previous estimates for our large acreage position.”

The SELH Project has tremendous potential for both oil and gas development, according to the two Australian partners.

“It has been extremely frustrating not to have been able to move ahead with the project until just recently,” Orchard said.

“Now that operatorship is in hand, a comprehensive plan put in place and strong support between partners established, we believe that a very significant step forward has been made in establishing the very large potential of the project.”

Working interest positions across the Southeast Lost Hills area are:

New acreage – Orchard Petroleum (operator with a 50% stake) and Nuenco (50%);

Ivanhoe Farm-in acreage (after promote) – OP (25%), Nuenco (25%) and Ivanhoe (50%);

Shallow Rights Area Blocks A & B – OP (operator with a 37.5-50% stake), Nuenco 37.5-50%) and NEG (25-0%);

Deep Rights Aera Block A (unchanged) – OP (operator with a 62.5% stake) and Nuenco (37.5%); and

Deep Rights Aera Block B (unchanged) – OP (37.5%), Nuenco (37.5%) and NEG (25%).