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MEC RESOURCES LIMITED

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MEC Resources (ASX:MMR) is registered as a Pooled Development Fund under the Pooled Development Fund Act (1992). It has been formed to invest into exploration companies that are targeting potentially large energy and mineral resources. 

MEC will provide carefully selected companies in the energy and mineral exploration sectors with development and exploration funding. MEC intends to identify investment opportunities with a number of specific characteristics including: large targets; a stage of development that permits a strategic investor or IPO within several years; strong and experienced management team and a definitive competitive advantage.

MEC’s current major investment lies in unlisted Australian oil and gas exploration company, Advent Energy Ltd. 

“PDFs and their shareholders receive tax benefits on the income derived from their equity investments. 

This is to help compensate for the higher risk of investing in SMEs. 

PDFs will be taxed at 15 per cent on the income and gains derived from equity investments in Australian SMEs. 

PDF shareholders are exempt from tax on the income and gains derived from holding and disposing of PDF shares.  

The extent of the above tax benefits depends upon a number of factors. PDFs and their shareholders should seek professional tax advice.”


source: https://www.business.gov.au/assistance/pooled-development-funds, retrieved 9/1/2018


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MEC has a controlling interest in the unlisted energy explorer Advent Energy Ltd (“Advent”) of 47.06% (as of 9/1/2018).


Advent has assembled a range of hydrocarbon permits which contain near term production opportunities with pre-existing infrastructure and exploration upside.


Advent’s assets include EP386 and RL1 (100%) in the onshore Bonaparte Basin in the north of Western Australia and Northern Territory and PEP11 (85%) in the offshore Sydney Basin.


A conventional 2C Contingent Resource of 11.5 Bcf (1C is 0.3 Bcf and 3C is 45.8 Bcf) for the Weaber Gas Field (RL1) has been assessed by an independent third party as a component of Advent’s drive to commercialise its 100% owned onshore Bonaparte Basin assets. Included in these assets in EP386 conventional recoverable resource estimates range from 53.3 Bcf (Low) to 1,326.3 Bcf (High) of Prospective Resources, with a Best Estimate of 355.9 Bcf of gas. The rapid development of the Kununurra region in northern Western Australia, including the Ord Irrigation Expansion Project and numerous resource projects, provides an exceptional opportunity for Advent to potentially develop its nearby gas resources for the benefit of the region along with Advent and its shareholders.


The Sydney Basin is a proven petroleum basin with excellent potential for the discovery of natural gas. Advent has demonstrated an active hydrocarbon system with seeps reported in the offshore area and sampling has indicated the presence of thermogenic hydrocarbon gas. This is considered to occur in basins actively generating hydrocarbons and/or that contain excellent migration pathways. Previous drilling has shown that the early Permian geological sequence is mature for hydrocarbons.


Undiscovered gross prospective recoverable gas resources for structural targets within the PEP11 offshore permit have been estimated at 5.7 Tcf (at the Best Estimate level). A Low Estimate of 0.3 Tcf and High Estimate of 67.8 Tcf has been assessed by Pangean Resources in 2010. PEP 11 lies adjacent to the most populous region of Australia and the major industrial hub and port of Newcastle.


Advent Energy’s Board of Directors includes:

Mr Goh Hock (Chairman)

Ms Deborah Ambrosini (CFO, Company Secretary and Executive Director)

Ms Diana Hoff (Non-Executive Director)

PEP11.jpg


Advent, through wholly owned subsidiary Asset Energy Pty Ltd, holds 85% of Petroleum Exploration Permit PEP 11 – an exploration permit prospective for natural gas located in the Offshore Sydney Basin. Joint Venture partner Bounty Oil & Gas NL holds the remaining 15%.


PEP 11 is a significant offshore exploration area with large scale structuring and potentially multi-Trillion cubic feet (Tcf) gas charged Permo-Triassic reservoirs. Mapped prospects and leads within the Offshore Sydney Basin are generally located less than 50km from the Sydney-Wollongong-Newcastle greater metropolitan area. This area has a population of approximately 5,000,000 people.


Heightening the prospectivity and critical positioning of PEP11, the Australian Energy Market Operator (AEMO) has warned that the developed gas reserves in eastern and south-eastern Australia can only meet forecast demand until 2019. The supply of gas into NSW has historically been from gas fields in the Bass Strait and Cooper Basin in South Australia. These gas reserves are declining. Australian east coast industrial gas prices continue to rise.


Wide ranging implications of AEMO’s forecast gas shortage include the inability to maintain a stable and efficient electricity supply to retail, commercial and industrial electricity consumers, an anticipated rise in natural gas prices and significant pricing and supply constraints that can affect the manufacturing industries and productivity on the Australian east coast. A forecast shortage in domestic demand has been demonstrated by AEMO for periods between 2018 – 2024, and again from approximately 2029. AEMO have also indicated an expectation that gas will become increasingly expensive for gas purchasers.


PEP11-2.jpg

NSW electricity and gas price projections to 2020 (Source: AEMO Media Statement; Retrieved 9 March 2017)

The total P50 Prospective Resource calculated for the PEP11 prospect inventory is 5.9 Tcf with a net 5 Tcf to Advent Energy (85%WI). The two largest prospects in the inventory are Fish and Baleen. The Fish prospect is assessed to contain a P50 prospective resource of 2.1 Tcf with Advent’s 85%WI share equal to 1.785 Tcf. The Baleen prospect is assessed to contain a P50 prospective resource of 0.475 Tcf with Advent Energy’s net share equal to 0.404Tcf (85%WI). Therefore, Advent’s working interest share of the two largest prospects is 2.189 Tcf.


The prospectivity of this proven petroleum basin has been enhanced by the confirmation of the presence of apparent ongoing hydrocarbon seeps. Sub-bottom profile data, swath bathymetry, seismic and echosounder data collected by Geoscience Australia along the continental slope / permit margin has demonstrated active erosional features in conjunction with geophysical indications of gas escape.


Advent has previously interpreted significant seismically indicated gas features. Key indicators of hydrocarbon accumulation features have been interpreted following review of the 2004 seismic data (reprocessed in 2010). The seismic features include apparent Hydrocarbon Related Diagenetic Zones (HRDZ), Amplitude Versus Offset (AVO) anomalies and potential flat spots.


Advent has demonstrated considerable gas generation and migration within PEP11, with the mapped prospects and leads highly prospective for the discovery of gas. Advent Energy is pushing ahead with a focused seismic campaign around a key potential drilling prospect in PEP11, in the offshore Sydney Basin.


A high resolution 2D seismic survey covering approximately 200 line km will be performed to assist in the drilling of the Baleen target approximately 30 km south east of Newcastle, New South Wales. A drilling target on the Baleen prospect with total depth of approximately 2150 metres has been identified in a review of previous seismic data. Intersecting 2D lines suggest an extrapolated 6000 acre (24.3 km2) seismic amplitude anomaly area at that drilling target. The report on this drilling target noted previous 2D seismic data showed that the Permian aged section of the Bowen Basin has producing conventional gas fields at a similar time and depth to PEP11 at the Triassic/Permian age boundary.


An Environment Plan has been lodged with the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and must be approved prior to commencement of the survey.


Future plans include acquisition of broadband 3D seismic data to better refine existing prospects and identify further prospectivity in the offshore Sydney Basin to potentially generate even more future drilling targets.

Cautionary Statement:


Prospective Resources are the term given to the estimated hydrocarbon volumes (petroleum) that may potentially be produced in the event that they are discovered by the drilling of an exploration well. Prospective Resources may potentially be recovered by the application of a future development project and may relate to undiscovered resource accumulations. These estimates have both an associated risk of discovery and an inherent risk of development. Further exploration and appraisal drilling will be required to determine the existence of a commercially recoverable quantity of petroleum (oil and/or gas).


Advent Energy uses probabilistic methodologies to the estimation of petroleum resource volumes at the field and/or prospect level. The estimates of prospective included in this report have been prepared in accordance with the definitions and guidelines set forth in the SPE-PRMS. All petroleum estimates are aggregated by arithmetic summation unless otherwise stated.


There are numerous uncertainties inherent in estimating reserves and resources, as well as in projecting future development capital expenditure, production costs and cash flows. Geoscientific resource assessment must be recognised as a subjective process of estimating subsurface accumulations that cannot be measured exactly.


Cautionary Statement:

Prospective Resources are the term given to the estimated hydrocarbon volumes (petroleum) that may potentially be produced in the event that they are discovered by the drilling of an exploration well. Prospective Resources may potentially be recovered by the application of a future development project and may relate to undiscovered resource accumulations. These estimates have both an associated risk of discovery and an inherent risk of development. Further exploration and appraisal drilling will be required to determine the existence of a commercially recoverable quantity of petroleum (oil and/or gas).


Advent Energy uses probabilistic methodologies to the estimation of petroleum resource volumes at the field and/or prospect level. The estimates of prospective included in this report have been prepared in accordance with the definitions and guidelines set forth in the SPE-PRMS. All petroleum estimates are aggregated by arithmetic summation unless otherwise stated.


There are numerous uncertainties inherent in estimating reserves and resources, as well as in projecting future development capital expenditure, production costs and cash flows. Geoscientific resource assessment must be recognised as a subjective process of estimating subsurface accumulations that cannot be measured exactly.

EP386RL1.jpg


Advent Energy, through wholly owned subsidiary Onshore Energy Pty Ltd, holds 100% of each of EP 386 and RL 1 in the onshore Bonaparte Basin in northern Australia. The Bonaparte Basin is a highly prospective petroliferous basin, with significant reserves of oil and gas. Most of the basin is located offshore, covering 250,000 square kilometres, compared to just over 20,000 square kilometres onshore.


EP386RL1-2.png

Location of EP386 and RL1 including the Weaber, Waggon Creek and Vienta gas fields, and other prospects and leads.

Since 1960 nine wells have been drilled within the present extent of EP 386, with six of those wells flowing gas to surface at various rates, and oil shows and/or fluorescence also reported in many wells.


Waggon Creek-1, drilled in 1995, provided strong evidence of a significant sweet gas-charged stratigraphic trap with fair to good quality sandstone reservoir within the upper Milligans Formation. Drilling of Vienta-1 in 1998 demonstrated numerous gas shows within Enga Sandstone units, with dry gas flowed to surface and visual porosity described in the cuttings. Both Waggon Creek-1 and Vienta-1 were cased and suspended for future production.


Production testing of the Waggon Creek-1 well has demonstrated flows of over 1 million standard cubic feet of natural gas per day (MMscf/d), and a gas column over a 217 metre gross interval. Production testing of the Vienta-1 well has demonstrated flows of over 2 MMscf/d. Gas flow at Waggon Creek-1 was from zones less than 1000m below surface.


Within EP386, recoverable Prospective Resource estimates range from 53.3 Bcf (Low) to 1,326.3 Bcf (High) of natural gas in conventional reservoirs, with a Best Estimate of 355.9 Bcf of gas (Advent 100%.WI). These estimates were prepared deterministically as defined under the Society of Petroleum Engineers Petroleum Resource Management System (SPE PRMS) guidelines.


Advent has previously advised that the 2C Contingent Resources* for the Weaber Gas Field in RL1 are 11.5 billion cubic feet (Bcf) of natural gas following an independent audit by RISC. Significant upside 3C Contingent Resources of 45.8 Bcf have also been assessed independently by RISC.


The results are summarised below:

EP386RL1-3.PNG

* Contingent Resources, as defined under the Society of Petroleum Engineers Petroleum Resource Management System (SPE PRMS) guidelines, using a probabilistic assessment.

The current rapid development of the Kununurra region in northern Western Australia/Northern Territory, including the Ord River Irrigation Area and its future potential expansion, the township of Kununurra, and numerous regional resource projects provides an exceptional opportunity for Advent to potentially develop its nearby gas resources. Flow rates observed from testing of the discovery wells within EP386 and the appraisal wells in RL1 demonstrate potentially commercial flow rates from a natural pressure depletion drive of the reservoirs encountered. Scope for enhanced and sustained flow rates from the existing cased and suspended wells within EP386 and RL1 is intended to be evaluated via a well intervention program, commencing at the earliest opportunity.


Market studies have identified a significant market demand of power generation capacity across the Kimberley region that could potentially be supplied by Advent Energy’s conventional gas projects in EP386 and RL1.


Potential commercialisation of Advent Energy’s gas fields may be via the virtual pipeline methodology, whereby gas produced at the wellhead is liquefied (or compressed) and trucked to end users as liquefied natural gas (LNG) or compressed natural gas (CNG). This method allows multiple customers to be “connected” to the one gas field, without the need for construction of permanent gas pipelines.


EP386RL1-4.jpg
Conceptual virtual pipeline system of (micro) LNG storage and trucking of LNG to end consumers (image courtesy of BHGE).


Advent is in an exceptional position to potentially satisfy this growing regional demand where it remains the operator and 100% owner of key petroleum permits in the vicinity of this region.


Cautionary Statement:

Prospective Resources are the term given to the estimated hydrocarbon volumes (petroleum) that may potentially be produced in the event that they are discovered by the drilling of an exploration well. Prospective Resources may potentially be recovered by the application of a future development project and may relate to undiscovered resource accumulations. These estimates have both an associated risk of discovery and an inherent risk of development. Further exploration and appraisal drilling will be required to determine the existence of a commercially recoverable quantity of petroleum (oil and/or gas).


Contingent Resources are estimates of potentially recoverable quantities of petroleum from known (drilled) accumulations where a number of wells have identified and tested an assessable volume. The assessed volumes are categorized as contingent resources because the project is considered not mature enough to define a commercially viable development due to one or more contingencies.


Advent Energy uses probabilistic methodologies to the estimation of petroleum resource volumes at the field and/or prospect level. The estimates of prospective and contingent resources included in this report have been prepared in accordance with the definitions and guidelines set forth in the SPE-PRMS. All petroleum estimates are aggregated by arithmetic summation unless otherwise stated.


There are numerous uncertainties inherent in estimating reserves and resources, as well as in projecting future development capital expenditure, production costs and cash flows. Geoscientific resource assessment must be recognised as a subjective process of estimating subsurface accumulations that cannot be measured exactly.

This is a paid advertisement. HotCopper does not endorse, approve or take responsibility for the statements made.
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