gog - anyone in this one?

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    Great Artesian Oil and Gas Ltd - not your typical junior player
    This Month's Features
    By Grace Moises from The Australian Investors

    Approximately 29 oil fields and 94 gas fields are presently on line and delivering oil and gas to the southern and south eastern Australian markets.

    Great Artesian Oil and Gas Ltd is not your typical junior player in this very competitive industry but with backing from Woodside Energy Limited and Beach Petroleum Limited, they are set to make animpression.

    Great Artesian has a strategic spread of petroleum exploration acreage in Australia’s most prolific onshore oil and gas province, the ‘Cooper Basin’. The company holds significant interests in this Basin in South Australia and Queensland. In addition, Great Artesian holds an interest in a highly prospective offshore permit in the Otway Basin in South Australia.

    Great Artesian initially acquired 100 per cent interests by way of successful competitive work program bids in each of its South Australian areas. It has since successfully negotiated agreements with farmin parties; Beach Petroleum Limited in the Cooper Basin and Woodside Energy Limited in the offshore Otway Basin. These parties will fund all exploration costs in those particular permits for up to two years with Great Artesian still retaining significant interests.

    Each of Great Artesian’s South Australian Cooper Basin permits was previously operated by Santos Limited and its partners for nearly 45 years since 1954. Over that period some 8.3 trillion cubic feet of gas and 130 million barrels of oil were discovered making the Cooper Basin Australia’s most important onshore petroleum province.

    Approximately 29 oil fields and 94 gas fields are presently on line and delivering oil and gas to the southern and south eastern Australian markets. When the Santos operated PELs 5 and 6 expired in 1997, the South Australian State Government offered the whole of these areas (excluding production licences around each field) for competitive bidding, thus providing a once in a 45 year opportunity for explorers, including smaller independents such as Great Artesian, to gain access to mature, but still highly prospective, exploration acreage where existing infra-structure ensures rapid development and sales from any new oil and gas discoveries.

    As might be expected, the South Australian Government’s bidding rounds attracted
    enormous interest with successful bidders for the 1998, 1999 and 2000 rounds committing to a total exploration expenditure in excess of $135 million, including the drilling of more than 100 exploration wells during the first four or five years. Great
    Artesian was ultimately successful with three of its applications which form a contiguous area across the southwest Patchawarra Trough; a highly prospective
    region for both oil and gas as reflected by the presence within or bordering these application areas of 14 oil and 23 gas fields.

    Already, exploration by other successful bidding companies has resulted in the Acrasia-1 oil discovery by Stuart Petroleum NL ("Stuart") and Beach, and the Sellicks-1 and Christies-1 discoveries by Beach and Cooper Energy NL ("Cooper Energy"). The Sellicks-1 oil discovery, located just four km south of PEL 91, flowed approximately 2,000 barrels of oil per day on test. It is a measure of the prospectively of Great Artesian’s acreage that Beach has farmed into our PEL 91 and PEL 107 to earn up to a 50 per cent interest by funding all of Great Artesian’s costs in these permits during the farmin period. This work is planned to include a total of 350 km of seismic and up to eight wells at a total estimated cost to Beach of $10.5 million. Already, Beach has completed the 220 km 2D Strombus Seismic Survey as part of its farmin commitments in PEL 91 and has recently commenced drilling of its two farmin wells, Moana-1 in PEL 107 and Carrickalinga-1in PEL 91. Exploration drilling success rates for the Cooper Basin in South Australia are high – with 1 in less than 2.5 wildcat wells for Permian gas being successful. In PEL 106 the success rate for all exploration wells has been even higher – 72 per cent or nearly three in four wells being discoveries. In PEL 107 the success rate for oil discoveries is better than one in two.

    Great Artesian is proposing to participate in a very active drilling programme during 2003 and 2004 in the South Australian Cooper Basin. This programme is planned to include drilling a minimum of 11 wells in the first two years, with a minimum of five wells programmed for the first year, including two wells in the July to August period
    of 2003.

    Unlike most of the other junior explorers in the South Australian Cooper Basin, Great Artesian also has an offshore area, which could potentially contain very large oil and gas reserves – EPP 27 offshore Otway Basin South Australia. Great Artesian acquired a 100 per cent interest in this highly prospective permit by competitive bid and was then successful in farming out a 10 per cent interest to Woodside in return for funding 2000 km of 2D seismic reprocessing. Woodside is earning an additional 30 per cent equity by funding 300 sq km of 3D seismic acquisition, processing and interpretation at a cost of approximately $8 million. Upon completion of this work Woodside has an option to fund 100 per cent of an exploration well during 2004 (approximate cost of $8-10 million) together with payment of the relevant permit costs to earn a further 50 per cent interest. Upon completion of this well Great Artesian will still retain a 10 per cent interest in the permit.

    As evidenced by their recent discoveries at Thylacine and Geographe in the Victorian sector, Woodside is a very successful operator in the Offshore Otway Basin. Their decision to farmin to EPP 27 and commit to significant expenditures supports the company’s belief that this is an extremely prospective permit.

    Great Artesian has excellent exploration areas, significant leverage through carried costs, and the people with the ideas, expertise and drive to discover and develop significant oil and gas fields. Great Artesian is well placed to become a successful oil
    and gas producer from its Cooper Basin acreage added to which is the very real potential of a "company maker" size discovery from our offshore Otway Basin permit.

    The quality of the acreage interests initially held by Great Artesian has enabled it to
    negotiate very attractive farmins with Beach and Woodside:

    •4 wells to be drilled and fully funded by Beach.
    •Already, farmins by Beach and Woodside provide a minimum $13 million of carried exploration expenditure.
    •Great Artesian will benefit with up to an additional $12 to 14 million of carried exploration expenditures, should options be exercised by Beach and Woodside under existing farmin agreements.
    •Great Artesian will participate in 5 to 6 wells in the first year and 11 to 12 wells in the first two years in ex-Santos, Brownfields, South Australian Cooper Basin, acreage.

    Prime focus is on exploration in Australia’s most prolific onshore oil and gas province, Cooper Basin South Australia.

    Here the Company’s three permits (PELs 91, 106 and 107) are characterised by:

    •Brownfields location – adjacent to producing oil and gas fields, and infra-structure
    including pipelines and gas processing facilities.
    •Highly prospective – historical exploration success rates are two to three times higher than average Cooper Basin success rates (PEL 107 is 55 per cent and PEL 106 is 72 per cent).
    •Large inventory of undrilled prospects and leads.
    •Aggressive drilling programme planned including participation in 5-6 wells in each
    of the first two years following listing.
    •100 per cent initial interests, Great Artesian retaining 100 per cent of PEL 106 and 50 per cent to 60 per cent in PELs 91 and 107 following Beach Farmins.

    The Company’s onshore acreage is complemented by a high impact ‘company making’ interest in EPP 27, offshore Otway Basin, South Australia which is characterised by:

    •100 per cent initial interest acquired by competitive bid.
    •Numerous structural targets identified with combined potential reserves of several
    trillion cubic feet of gas.
    •Prospectivity supported by farmout to Woodside.
    •Great Artesian already carried through over $8 million in expenditure by Woodside.

    If Woodside continues its farmin, Great Artesian will retain either 60 per cent
    interest, or at Woodside’s election be carried for a residual 10 per cent interest through an $8 - $10 million exploration well.

    Great Artesian has an experienced and well-qualified Board of Directors. The company’s chairman, Mr Norman Zillman, was former Exploration Manager and
    Deputy General Manager of Crusader Limited and a long-standing member of the Management and Technical Committees of the South Australian Cooper Basin Oil and
    Gas Unit.
 
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