Empyrean is to earn a 38.5% working interest by funding 55% of the drilling, testing and completion of the first appraisal well, due for spudding next month, Victoria Petroleum said yesterday.
Subject to the success of Eagle North-1, VicPet will have a 20% interest in the project once Empyrean has recovered all of its farmin costs.
VicPet will fund its 4.529% of the drilling and completion costs of Eagle North-1 from the $100,000 prospect and land fee paid by Empyrean.
VicPet managing director, John Kopcheff, told EnergyReview.net he believed this project had company maker potential.
Kopcheff described the Eagle well, which contains a potential 13 million mean barrels of oil, as a “low-risk engineering exercise.”
“We want to prove that it’s possible to drill a horizontal well that produces 1000 barrels per day,” he said.
“If it’s successful, a nine-well program will follow”
“With our 20% near-free-carried interest in the drilling of the Eagle North-1 appraisal well, a successful result will have a significant impact on Victoria Petroleum NL’s position as a oil and gas producer in the USA.”
A rig contract has been signed with Kenai Drilling to drill Eagle North-1 in mid-late November 2005.
Eagle North-1 will be vertically drilled to its target depth of 4,200 metres and upon the discovery of oil in the target Gatchell Sandstone, the well will be cased and production tested for five days.
A 300-metre horizontal lateral well will then be drilled and completed for production, said VicPet. In the event of a successful horizontal well completion, the company expects flow rates of up to 1000 barrels of oil per day.
The Eagle Oil Pool is projected to contain P10 recoverable reserves of up to 34 million barrels of oil and 58 billion cubic feet of gas.
Eagle North-1 was discovered in 1986 by Mary Bellocchi-1 in which VicPet was a participant. The Mary Bellocchi-1 well tested oil from the Gatchell Sands at rates of up to 223 barrels of oil per day and 0.8 million cubic feet of gas per day.
But these production rates were considered un-economic at the then US$11 per barrel oil price.
Then in 2001, the Eagle-1 horizontal well was successfully drilled into the Gatchell Sandstone oil reservoir. But technical difficulties meant the operator was unable to production test the 90 metres of interpreted oil-pay drilled.
Kopcheff said he was hoping that Eagle would be a case of third time lucky, after production and drilling was halted twice for different reasons.
“We’ve been waiting a long time to do this,” he said.
“There’s a lot of reasons why we’ve decided to move now.
“Firstly, there are the improvements in horizontal drilling technology and secondly there’s the three-fold increase in oil prices to think about. The risks are the same as they were before, if not better.”
Empyrean has been quoted on AIM since July and is focused on energy resource exploration and development in geopolitically stable environments.
Participants in the Eagle Oil Pool Development Project and Eagle North-1 are: Empyrean Energy PLC (38.5%); Victoria Petroleum NL (20%); First Australian Resources NL (15%); Lakes Oil NL (15%); Sun Resources NL (10%); and US private interests 1.5%.
