“We have been extremely pleased with the Wandoo purchase,” Streitberg said in a CorporateFile Open Briefing.

“We believe that we paid a very competitive price, and the performance of the assets since the purchase more than justifies the price we paid. We have both great upside, which we didn’t pay much for, and substantially more cash flow than we had budgeted on.”

BassGas

Streitberg said Arc was “particularly pleased” with recent developments at the BassGas project in the offshore Otway Basin, Victoria.

“The first thing that happened was that the joint venture came to an agreement with Clough in relation to the dispute,” he said.

“There had been a possibility that the arbitration process could have dragged on and distracted everyone from adding value to the asset. We are delighted that the dispute was resolved just after we bought the asset, sparing us substantial ongoing costs.”

But results of seismic data interpretation over discoveries adjacent to the Yolla Field were of even greater significance. The joint venture partners have mapped these independently on new and reprocessed 3D seismic data and have agreed on the prospects’ potential, according to Streitberg.

“The rest of the joint venture, and Origin as operator, have agreed that there are high potential undeveloped resources that could easily be as big as the existing Yolla Field, which has about 300 petajoules of gas reserves,” he said.

“This tells us the asset has significant value well beyond what we paid for it.”

The JV is now aiming to drill more wells and to get a sales contract.

“We have some slots reserved on the Kan Tan IV rig which should be available to us late next year and we will also look at drilling some exploration wells at the same time,” Streitberg said.

“As far as a gas contract goes we have been pleased to see East Coast gas prices start to rise and although they are unlikely to get as high as current West Coast prices in the short term, any increase is very welcome.”

The offshore Perth Basin

The Cliff Head oil field in Western Australia’s offshore Perth Basin has been performing better than expected, according to Streitberg.

“During the purchase process the production rate was down as some scheduled maintenance work was carried out, but since the purchase it has been consistently producing at rates above 11,000 barrels of oil per day,” he said.

“We have now produced over four million barrels of oil without any real sign of the rate dropping off. This is an excellent result and may mean our recoveries and hence reserves are better than we expected.”

Streitberg also said the results of recent offshore Perth Basin exploration in acreage purchased from Wandoo also looked very promising.

The three-well program found gas at Frankland-1 in April and oil at Dunsborough-1 in May.

Arc has been more bullish about these finds than joint venture partners Roc Oil and Australian Worldwide Exploration, but in August Roc said these two finds had commercial potential.

Streitberg said Arc had made good progress in understanding what was needed to develop the gas at the Frankland discovery.

“We and are working with Roc as operator to firm up the development and be in a position to bring it on stream as soon as the joint venture approves it,” he said.

“The timing is dependent on when we can get the rig back to drill an appraisal-development well and there is now a possibility that might happen early next year.

“We have a bit more work to do on Dunsborough as far as an oil development goes, but the encouraging thing for us is that we have 30 percent of both these discoveries and if we can get them onstream we will have replaced at least three years of production, which is a pretty good outcome for a three-well drilling program.”