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Molopo report

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    MPO - Third Quarter Activities & Cashflow Repo 1/2 (M)

    MPO - ASX Company Announcement
    30 April 2002
    Part 1/2

    HOMEX - Melbourne
    Third Quarter Activities & Cashflow Report

    Molopo completes sale agreement with Heim; continues production
    testing at ATP564P in the Bowen Basin; advises OCA that it will
    exercise its option over the northern undeveloped portion of PL94

    In the March quarter, Molopo concluded a Sale Agreement with Helm
    Energy-Australia LLC ("Helm"), for the sale of 50% of Molopo's net
    interest in ATP564P and 50% of Molopo's option to earn a 50%
    interest in the northern undeveloped porion of PL94 ("the
    Properties"), both located in the Bowen Basin, Queensland, Australia,
    thus earning Helm a net 25% interest in those Properties.

    The agreed sale price of US$5 million was payable in the form of
    US$15 million rash (A$2.83m) on completion, following the receipt of
    Ministerial Approval, with US$3.5 million to be paid over a maximum
    period of 3 years by means of Helm financing Molopo's new net share
    of future exploration, appraisal or development costs in the

    During the March quarter, Molopo also entered into an agreement with
    Helm whereby Helm advanced US$300,000 to Molopo. The advance was
    treated as part of the US$l.5m payable by Helm on final settlement of
    the sale of net 25% of ATP564P.

    Molop is now in a strong cash position to undertake further
    exploration, appraisal and development on new and existing projects.

    Australia - Bowen Basin Coalbed Methane Joint Venture - (ATP564P &
    PL94) In the March quarter, Molopo notified Oil Company of Australia
    (Moura) Pty Limited (OCA) that Molopo will exercise its option to
    farm-in to the northern undeveloped portion of Production License
    (PL) 94 in the Bowen Basin. The option allows Molopo (with Helm) to
    farm-in to this area earning a 50% interest (net 25% each) by
    expending A$800,000. Funding for the farm-in will come from Helm who
    will contribute the A$800,000 in accordance with the Sale Agreement.

    PL94 adjoins the southern border of ATP564P. OCA currently operates a
    succssful coalbed methane ("CBM") project in the southern section of
    PL94. A gas spur pipeline runs directly through the lease connecting
    to the Wallumbilla-Gladstone pipeline.

    The work programme is expected to include up to two production wells
    in the Mungi prospect and should commence in May 2002. This will
    include one surface to in-seam well and possibly a conventional water
    frac, for comparison. This may then be followed by an expanded work
    programme that is likely to include several more production wells.
    Details of the final programme will be provided once agreed among the
    joint venture partners.

    Molopo continued production testing at the Harcourt and Mungi gas
    accumulations in ATP564P, where the Company has a joint ventur with
    OCA. Since its last workover, the Harcourt well has averaged
    approximately 140,000 cf/day. This result is based on production from
    a reduced coal section and is considered encouraging from a
    stand-alone well. The Mungi well has averaged nearly 85,000 cf/day on
    the same basis as the Harcourt well. This flow rate from the deepest
    part of the prospect (where permeability is lower) is also
    encouraging and suggests the possibility of higher flow rates from
    the up dip section of the permit area.

    ATP564P is located in Queensland's Bowen Basin and adjoins OCA's
    existing production lease (PL94) where OCA has already established a
    commercial coalbed methane operation. It is located close to key
    infrastructure including the Wallumilla-Gladstone pipeline, which
    passes through the Harcourt gas accumulation area.

    Molopo has commenced discussions with potential buyers of methane so
    as to establish a market once additional production from the Harcourt
    and Mungi areas has been established.

    Australia - Gloucester Basin Coalbed Methane Project - (PEL 285)
    Following the end of the March quarter, Molopo and AJ Lucas Coal
    Technologies Pty Ltd were advised that their joint offer dated 20th
    February 2002 made to Pacific Power in respect of the purchase of
    Gloucester Petroleum Exploration Licence (PEL) No, 285 had been

    The offer is in connection with the extraction of coalbed methane
    ("CBM") gas from the licence area known as "the Gloucester Basin",
    ocated approximately 100km north of Newcastle. The area is well
    known to Lucas and Molopo, the development of which will be
    undertaken by way of a joint venture between the two companies.

    Initially Lucas will have an 81.82% and Molopo an 18.18% in PEL285
    with Molopo able to increase its stake to 50% by catch-up funding in
    Phase 2 of the project. Lucas and Molopo will make a further detailed
    announcement regarding the joint venture transaction.

    The Gloucester Basin is highly prospective for CBM as demonstrated by
    9 CBM coreholes previously drilled by Pacific Power, PEL285, which
    covers an area of approximately 2OO sq km, contains the 5 sq km
    Stratford Prospect, which is estimated to contain as much as 90 BCF
    of gas-in place.
    A three year work program will be undertaken in two phases: Phase 1
    which is expected to include an initial review of all available
    geological and seismic data followed by the drilling of two
    production and two core holes; and Phase 2 which is expected to
    entail further production well drilling and an extensive pilot
    appraisal programme.

    There are a number of conditions subsequent that require fulfilment,
    including approval to the transfer of PEL285 by the NSW Department of
    Mineral Resources.


    During the March quarter, Molopo met with its Chinese joint
    management partner, CUCBM, to discuss the continuation of production
    testing at the Liulin project in Shanxi Province, China.
    Molopo and CUCBM agreed to continue with the testing program
    concentrating on the LW-L3 well, which has demonstrated the potential
    to produce commercial flow rates.

    Gas production testing at the LW-L3 well has been delayed while an
    assessment of pump suitability was undertaken. Production testing is
    expected to resume either late June or early July 2002

    VENTURE - (PEL 13 & 426)

    No work has been undertaken on either PEL 426 or PEL 13 in the March


    No work has been undertaken on the gold projects in North Korea in
    the March quarter.


    A local dispute has meant that oil production and further deelopment
    of the Sredne Kharyaginskoye ("SK") oil field in Russia's Timan
    Pechora Basin, has not yet resumed.

    A Metcalfe

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