Q1
Quarterly Report 30 September 2016
CARNARVON PETROLEUM LIMITED
Quarter Highlights:
-
Outtrim East-1 oil discovery announced in July 2016
-
Roc-2 drilling commenced in the quarter and the discovery announced in September 2016
-
After quarter end, Carnarvon announced the successful Roc-2 flow test
-
Awarded WA-524-P with multiple oil and gas fields surrounding the permit
-
A$65.1 million held in cash plus future receivable of up to US$31.3
Ma na ging Dir e ctor' s C omments
The company's focus on the North West Shelf (NWS) showed material progress during the quarter, particularly with the drilling of two wells, Outtrim East-1 and Roc-2. In addition to this drilling activity we added another attractive exploration permit to the portfolio and we also continued with the less obvious but equally important work to build on the quality of our technical database, giving the Carnarvon geoscientists the very best tools to explore for oil and gas.
The Outtrim East-1 well was drilled and declared an oil discovery on 11 July 2016. Approximately 90 metres of core was extracted from the well and is currently being assessed in laboratories in Perth. This core evaluation is important for determining the extent and quality of the reservoir discovered and therefor to determine the recoverable volumes in the Outtrim and Outtrim East structures.
The Roc-2 appraisal well successfully encountered gas and condensate over a 60m gross column. On 19 October 2016 Carnarvon announced the successful flow test of the Roc-2 well, with flow rates recorded of up to 51.2 million scf per day of gas and 2,943 barrels of condensate per day under equipment constrained flow conditions. This was a very good result and exceeded Carnarvon's expectations.
As mentioned in previous announcements, the company acquired a significant amount of 3D seismic data following the success at Phoenix South-1. Carnarvon has made significant progress interpreting this data, particularly around the Phoenix and Roc area. Revised resources for the Phoenix South Barrett and Caley structures, the Roc Caley structure as well as a number of other prospects including the very large Dorado structure are expected to be announced to the market in the coming quarter.
During the quarter, the company was awarded the WA-524-P permit situated on the flanks of the Dampier Sub-Basin, an important part of the highly prospective Greater Carnarvon Basin. Early technical evaluation identified three prospects in the Permo-Triassic stratigraphy within the permit - the same interval in which we've had the Phoenix South and Roc success. Carnarvon has also identified through its regional technical work, the potential for a similar pre-Jurassic play on the flanks of the Dampier Barrow Sub-Basin.
Finally, the company continued with its core activity of enhancing its database and identifying opportunities in the North West Shelf. In particular, a lot of progress was made in the Full Wave Inversion project in the Bonaparte Basin to solve regional depth conversion challenges and the industry leading North West Shelf stratigraphic database with MG Paleo which will result in Carnarvon having exclusive interpretations of approximately 3,000 wells that have been drilled on the NWS.
Adrian Cook Managing Director
CARNARVON PETROLEUM LIMITED
Roc Gas and Condensate
(Carnarvon 20%, Quadrant Energy is the Operator)
In January 2016, gas and condensate were discovered while drilling the Roc-1 well. This was the second well drilled by the current joint venture, both of which have been successful in discovering hydrocarbons. These discoveries complement the Phoenix-1 and Phoenix-2 hydrocarbon discoveries made some 30 years previously.
The first tranche of sidewall core analysis from Roc-1 shows permeability of the reservoir is up to 500mD, with Carnarvon's interpreted average being approximately 130mD. This is significantly better than the permeability required to achieve commercial flow rates.
Carnarvon commenced drilling the Roc-2 appraisal well in July 2016. This well successfully encountered gas and condensate which was announced to the market on 23 September 2016. There were a number of gas and condensate bearing sands discovered over a 60m gross column. The average porosity of the sands was 9% with some sections showing porosities of up to 15% which is very encouraging for the area.
Following the end of the quarter the joint venture successfully completed a drill stem test to determine the flow rate in the Roc structure.
Given the number of sands encountered in Roc-1 and Roc-2, Carnarvon is re-calculating the resources for the Roc structure. These will be released following the results of the drill stem testing.
Caley sands encountered in the Roc-2 well
CARNARVON PETROLEUM LIMITED
Phoenix South Light Oil
(Carnarvon 20%, Quadrant Energy is the Operator)
Light oil was discovered in the Phoenix South-1 well in the second half of 2014. The discovery excited the industry and importantly changed its perception of the Bedout sub-basin.
The discovery opened up the prospectivity of this largely underexplored basin, demonstrating the first new play concept in the North West Shelf since the prolific Exmouth sub-basin some 20 years previously. This is the first time an oil discovery has been made in Lower Triassic aged sediments on the North West Shelf.
DeGolyer and MacNaughton were engaged by Carnarvon to provide an independent assessment of volumes in the area. They assessed the mid case estimate of recoverable oil at Phoenix South to be 19 million barrels, with upside potential of up to 55 million barrels of recoverable oil*. This Phoenix South oil is of a similar quality to the Roc condensate and could be tied in and produced within a common development infrastructure. For more information on the Phoenix South discovery and resource estimates, refer to the ASX announcement made on 7 April 2014.
Carnarvon is currently in the process of reviewing its resources in the area which will include revised Phoenix South resources based on updated technical information that has been received.
Well location image within the Greater Phoenix Area. New seismic is being licensed and interpreted south of Roc-1 and Roc-2 where new prospects have been identified including the Dorado prospect