The Board of Metgasco Ltd is pleased to announce that the ATP2021 JV (Metgasco 25% owner) has executed a term sheet with a 90 day exclusivity period to negotiate a binding farm-in agreement with a subsidiary of Senex Energy Ltd for PRL 211 on the South Australian side of the Cooper/Eromanga basins.
Under the joint venture, Vintage Energy Limited (“Vintage”, ASX: VEN) will become the operator with 42.5%, Metgasco with 21.25%, Bridgeport with 21.25% and Senex with 15%, with Senex to be free carried through the drilling of the first well.
PRL 211 is a 98.49 km2 retention license that is close to infrastructure? and has an initial five-year term expiring in October 2022, with an option to renew the permit for a further five years.
The licence is located (see Figure 1) in the South Australian side of the Cooper / Eromanga Basins and immediately adjacent to ATP2021 (Vintage 50% and Operator). Senex is currently the operator and 100% interest holder of PRL 211.
Under the terms of the farm-in, the ATP2021 Joint Venture participants will drill a well in the Odin structure (with Metgasco paying 25% of the estimated cost of the well, approximately $1.0 million contribution by Metgasco) for a 21.25% equity interest in PRL 211. All further work, including the potential to complete and flow test the Odin well will revert to equity share?. The well will be located in PRL 211 with the drilling targeted to take place in Q4 FY20.
The farm-in is subject to a number of conditions, which are to be satisfied by 31 January 2020 (or such later date as the parties may agree), including:
- Ministerial approvals;
- Confirmation that PRL 211 will remain part of Senex's PRL scheme group;
- The farm-in parties demonstrating that between them there are sufficient funds available to drill the well; and
- Negotiation and execution of formal farm-in and joint venture documents.
The main target in PRL 211 is the Odin structure, which is fully covered by recent 3D seismic and has gas potential in the Patchawarra and Toolachee formations (see Figure 2 below). The prospect straddles the border between PRL 211 and ATP2021 and is similar to the Vali prospect scheduled for drilling by the ATP2021 Joint Venture in December 2019.
Odin is a Permian four-way dip closure situated on a structural nose that plunges north-eastwards into the Nappamerri Trough near the producing reservoirs at the Bow, Beckler and Dullingari gas fields.
Seismic mapping indicates that the Toolachee formation has approximately eight metres of structural relief over nearly 5.2 sq km, and a chance of success (“COS”) of 35% with a high chance of development. The Patchawarra formation has 15 metres of structural relief over nearly 2.5 sq km, a COS of 26% and a high chance of development. Stratigraphically trapped gas outside of mapped anticlinal closure is a possibility.
Odin Net Prospective Resources
- In November 2018 Metgasco announced prospective resources when it was a 100% owner of the ATP2021 licence (refer to ASX announcement of 22 November 2018);
- In May 2019 Metgasco farmed out 50% to Vintage and operatorship;
- In August 2010 Metgasco farmed out 25% to Bridgeport and retained a 25% interest; and
- Vintage on behalf of the JV has reviewed the Odin prospect and gross and net resources.
Volumetric estimates as calculated by operator Vintage. The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates are un-risked and have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of potentially significant moveable hydrocarbons. These prospective resource estimates are probabilistic in nature and are recoverable raw gas attributable to JV gross (100%) and Metgasco net interest (25%) in the Odin prospect as of 14 October 2019. The resources have been classified and estimated in accordance with the Petroleum Resource Management System (PRMS). Metgasco is not aware of any new data or information that materially affects the estimate above and that all material assumptions and technical parameters continue to apply and have not materially changed. The JV intends to drill the Odin prospect in Q2 CY 2020, following seismic reprocessing and mapping in December 2019 to confirm the optimal well location. This reprocessing work is not expected to substantially change the volumetrics.
Ken Aitken, Metgasco Chief Executive Officer, commented:
“Metgasco has been interested in farming into the PRL 211 licence for the last year due to a sizable portion of the 3D defined Odin gas prospect being present in the neighbouring licence. The Metgasco Board believes it makes sense for Metgasco to have equity in both sides of this prospect, and that the ATP2021 JV operate the exploration well, and on success, development of the Odin structure. The prospect itself is considered a low risk, highly prospective extension of Metgasco’s plans to expand its exploration business in the Cooper / Eromanga Basins“.
