Perth-based Empire yesterday said its Gulliver Productions subsidiary had received cash funds from Phoenix Resources to drill Stokes Bay-1.

Gulliver had agreed to vary the balance of the Phoenix cash call of $A350,000, to be called and paid during the September quarter, to accommodate Phoenix’s expenditure relating to Stokes Bay-1 well costs.

Phoenix is paying Gulliver $1.35 million to earn a 30% interest in the EP 104 Permit and Retention Lease R1. Phoenix also has the right to spend a further $135,000 to earn a 30% interest in the Application for Production Licence L98-1 by contributing to a workover of the West Kora-1 oil discovery.

The previously announced Emerald Oil & Gas farm-in agreement provides for Emerald to contribute 25% of the Stokes Bay-1 costs to earn an 18.75% interest in EP 104 and R1. Emerald also has the option to earn an 18.75% interest in L98-1 by contributing 25% of the West Kora-1 workover.

Empire, which will retain up to a 25% interest in EP 104, R1 and L98-1, is negotiating with drilling contractor Australian Drilling Services to contract Rig 6 to drill Stokes Bay-1 before the onset of the Kimberley wet season.

Stokes Bay-1 will be a directional well targeting the Carboniferous-aged Anderson Formation, productive at the nearby Point Torment-1 gas discovery, which in 1992 flowed 4.3 million cubic feet of gas per day. Stokes Bay-1 will target potential recoverable reserves estimated at 80 billion cubic feet of gas and 10.3 million barrels of oil.

Phoenix can also elect to contribute 30% of the costs, with the option to increase its equity to 40% by paying 45% of the costs, of the deep rights well, Valentine-1, which has an estimated total drilling cost of $A5 million. The Stokes Bay-1 well site may also be used for the Valentine-1 well.

The Valentine Prospect is interpreted as a stratigraphic trap on the downthrown side of the Pinnacle Fault covering 50 square kilometres. The reservoir objective is a package of Late Devonian fan sands of the Virgin Hills Formation.

Potential recoverable reserves, if hydrocarbons are present and if the trap is filled to spill point, are estimated to be about 200MMbbl of oil or 1.2 trillion cubic feet of gas.