Bounty Announces Quarterly Activities Report

Source: www.gulfoilandgas.com 4/29/2021, Location: Not categorized

Highlights
- Bounty completes 2020 Australian oil drilling campaign with 7 successful oil wells with 5 of the new wells on line this quarter
- Cash and current assets at 31 March 2021 were $1.9 million with nil debt
- Unaudited revenue from oil sales for quarter ended 31 March 2021 was $0.35 million
- Oil Development – Naccowlah Block
- Naccowlah Block oil delineation and development drilling will be the 2021 focus
- Operator has identified 12 additional development and NFE (near field exploration) targets with 3D seismic
- 2021: Planning for 5 new appraisal and NFE oil wells advancing
- Oil/Gas Exploration
- Gas exploration: PEP 11 joint venture supporting national gas strategy by actively advancing plans to drill, Offshore Sydney Basin
- PEP 11 permit extension anticipated as Bounty continues preparations to drill the Baleen gas prospect
- Preparations for oil production continuing at Alton area in Surat Basin

Oil Business - Production:
Bounty produces oil from the Naccowlah Block in SW Queensland. Production was around 46 bopd. Oil revenue during the quarter was $345,000. Average realized oil price for the quarter was AUD 83/bbl.

Bounty expects to commence oil production from the Alton area, Surat Basin, SE Queensland in 2021.

Oil Business – Production and Development:

SW Queensland
ATP 1189P Naccowlah Block and Associated PL’s - Bounty 2%
Location: Surrounding Jackson, Naccowlah and Watson Oilfields
Background - Summary
The Naccowlah Block comprises 1,793.9 km2 approximately 17% of which is covered by ATP 1189 (N) and the remainder in 25 petroleum production leases (PL’s).

Activities during the Quarter
Four wells are awaiting further studies prior to connection – Tennaperra 9, Watson North 2 and 3 drilled in 2019 and Cooroo NW 3 drilled and cased in the June 2020 quarter.

Significant Activities Next Quarter / 2021
Five wells, three appraisal and 2 NFE wells, are being planned for 2021. These wells will appraise the same Birkhead zone reservoir as the previous wells but further along trend in the Natan-Bolan-Corella area. The Watson-Watkins area in the south of the Block is the next area in which further development and appraisal drilling targets will be focussed.

The operator is also preparing to build additional pipelines in the greater Cooroo/Natan-Bolan-Corella area of Naccowlah Block to transport additional developed oil from the recent successful drilling campaigns.

Oil Business – Development:
Southern Surat Basin Onshore Queensland
PL 2 Alton Oilfield Bounty - 100%; ATP 2028P – Bounty 50%
Location: 70 km northeast of St. George and 440 km west of Brisbane, SE Queensland.

Background
The location of Bounty group Southern Surat Basin interests is shown below. Alton has had historical production of over 2 million barrels from the early Jurassic age Evergreen Formation.

Bounty’s oil resources in the Southern Surat Basin are light oils (high API) derived from Permian coals (Cooper Basin equivalent).

Activities during the Quarter and Next Quarter
Bounty focused on data digitisation, compliance and development planning for 2021 oil production. Although oil prices remained subdued during the quarter Bounty is proceeding with expenditure and plans to recommence oil production at Alton.

2021 Plans
Bounty is actively planning to work over 2-3 wells at Alton in 2021 and commence oil production while it generates a full field development plan aimed at producing 167,000 bbls of potential recoverable oil of from the Evergreen Formation. Further development will include drilling an up-dip appraisal well at Eluanbrook in the northwest section of PL 2 B and up to 3 attic oil locations within Block 2 C - the Alton Pool. Initial production of 100 bopd is expected from the Evergreen Formation and then moving to develop attic oil. Bounty is targeting 350,000 bbls of oil within known pools in PL 2.

Surat Delineation/Exploration
Further Programmes
PL 2 and ATP 2028P (PCA’s)
Bounty has lodged applications for potential commercial areas (PCA’s) on ATP 2028 the area which surrounds the Alton Field. There are two principal targets for exploration in ATP 2028; the 200,000 barrel Mardi lead to the west of Alton in the Jurassic age Boxvale Sandstone and the Triassic age Showgrounds Sandstone in channels up dip from oil in Farawell 1.

After commencement of oil production at Alton Field Bounty will pursue the drilling and development of these targets.

Summary
As operator of PL 2 Bounty sees potential for oil projects in the Southern Surat area to deliver 200 - 300 bopd ($6 million pa gross revenue) as the oil price continues to recover.

Exploration:
Nappamerri Trough Eromanga Basin, NE South Australia – Bounty 23.28% in section above the Permian Location: 50 km northeast of Moomba, South Australia. There was no material joint venture activity in the quarter.

Rough Range Project Onshore Carnarvon Basin – WA
L 16 – Bounty 100%
Location: Exmouth Gulf – WA

Background
The principal undrilled prospect is the 3 million bbl potential Bee Eater prospect in the southern section of L 16.

Activities during the Quarter and next Quarter
Bounty is re-mapping regional seismic data sets and analyzing the geological database attempting to image the principal structures in the region. This is challenging due to poor surface statics. The targets are relatively shallow at around 1100 metre depth to target. Seismic re-processing for L 16 is planned for early 2021 with a potential drill test contingent on seismic imaging.

Gas/Condensate Business (incl. associated Oil development)
Downlands PL 441; PPL 58 (Bounty 100%) and PCA 159 (Spring Grove) Bounty 24.748% Surat Basin, Queensland
Location: 2 km north of the town of Surat
Activities during the Quarter
During the quarter Bounty continued to refine a development plan to produce sales gas to be delivered through its 100% owned Downlands gas compression plant and pipeline and into the SE Queensland market. Bounty continued a full facilities and environmental review of the project.

PCA 159 (Spring Grove JV)
This oil discovery adjoins PL 441 to the southeast and the Potential Commercial Area application over the Spring Grove oil discovery awaits DNRME approval.

Gas Growth Projects:
PEP 11 - Offshore Sydney Basin, New South Wales – Bounty 15%

Background
PEP 11 covers 4,576 sq. km immediately adjacent to the largest gas market in Australia and is a high impact exploration project. PEP 11 remains one of the most significant untested gas plays in Australia. The PEP 11 JV has demonstrated considerable gas generation and migration in the offshore Sydney Basin, with the previously observed mapped prospects and leads being highly prospective for gas. In 2010 it drilled New Seaclem 1 and demonstrated capacity to drill in this permit.

A 200km 2D seismic survey was completed in March 2018 in the area of the Baleen prospect and with AVO analysis further refined the Baleen target located 30 km south east of Newcastle. Joint Venture focus now is a drill test of Baleen where AVO (Amplitude versus Offset) analysis has defined an anomaly in the prospective Early to Mid-Permian sequence. The marine sands of the sequence are the targets especially further seawards where the sands can be expected to have good reservoir characteristics.

Activities during the Quarter – Baleen Drill Test
The operator, Advent Energy Ltd (Advent), has submitted to NOPTA an application to enable the drilling of the Baleen drill target in PEP 11. The PEP 11 Joint Venture has reviewed the work program and now proposes to proceed with the drilling of a well at Baleen subject to approvals from NOPTA and other regulatory authorities, and financing. It has made an application to NOPTA to change the current Permit conditions.The permit is in good standing and continues during this review period. The application to NOPTA includes the extension of the permit title for up to two years to enable drilling and includes an application for the removal of the requirement for a 500 sq. km 3D seismic program. NOPTA has confirmed that this application is now in the final decision phase.

On 5 February 2021, Advent, on behalf of the PEP 11 joint venture, also submitted an application to suspend and extend the PEP 11 permit. The application was made under the COVID-19 - Work Bid Exploration Permits announcement released by the Federal Government on 20 April 2020. In that release the Government recognised that the COVID-19 pandemic was having a significant impact on the offshore petroleum sector and that additional flexibility would be required to assist titleholders to manage the COVID-19 crisis. The Joint Authority confirmed in that release that it regarded the COVID-19 pandemic as a force majeure event. The application for a 24-month suspension of the Permit Year 4 work program commitments, with a corresponding 24-month extension of the permit term was accepted for processing by NOPTA. This application was lodged to ensure the company is not in breach of the Year 4 PEP 11 work program and expenditure commitments. Advent does not foresee this further application interfering with the NOPTA application to extend the permit terms for PEP 11.

Bounty and its joint venture partner Advent are proposing to use the gas drilling program at Baleen to also investigate the potential for CCS - Carbon Capture and Storage (geo-sequestration of CO2 emissions) in PEP 11. CCS can capture CO2 fossil fuel emissions. Both the International Energy Agency and the Intergovernmental Panel on Climate Change believe that CCS can play an important role in helping to meet global emission reduction targets.

CCS is part of a suite of solutions with the potential to mitigate greenhouse gas emissions and help address climate change. The Sydney Basin area is a major contributor to Australia’s greenhouse gas emissions. Up to 34% of the total national emissions are from this part of east Australia. Independent Government research has indicated at least 2 TCF (Trillion Cubic Ft) of CO2 storage may be feasible in the offshore Sydney Basin.

The Joint Venture is a strong supporter of plans for Net Zero by 2050 and sees it playing a direct role in achieving that target, especially in New South Wales. It aims to do this in two ways. First, by finding gas closest to Australia’s biggest domestic energy market, gas which can be used to provide reliable back-up for the increased uptake of renewable energy in NSW. Second, through its plans to explore for opportunities in offshore NSW for CCS, a key clean energy technology. The significance of the carbon storage objective in addition to gas has been highlighted by the report from The Australian Financial Review (7 April 2021) “Carbon prices tipped to surge” which references dramatic action in Europe’s carbon markets with “carbon prices almost doubling in the last four months from Euro 23 (A$35) a tonne in November 2020 to Euro 41 (A$62) in March 2021 as more ambitious (carbon) markets aligned with net zero emissions goals to drive prices higher.”

Advent has signed a Preliminary Well Services Agreement (Agreement) with a major offshore drilling manage. Under the Agreement Add Energy will initiate a review of rig availability and engagement terms for the Baleen well program. Add Energy will also develop a scope of supply for regulatory and environmental compliance and review the drilling campaign schedule including a review of the program for geo sequestration drilling research as part of the Baleen drill project. Add Energy provides drilling and well engineering specialized consultancy services and solutions to the energy industry on a global scale, including well design and environmental services. Add Energy is headquartered in Stavanger, Norway and operates in every region of the world from 15 locations including Europe, the Middle East, the Americas and Australia. Add Energy will deliver phased approach services to Advent for the preparation and drilling of the Baleen Well in PEP 11. In the first stage of the phased approach, Add Energy will provide technical support in the following areas:
• Review of current well design documentation.
• Develop a suitable well design and cost estimates.
• Develop a drilling schedule and define a ready to drill tentative window.

The initial report received from Add Energy documents the Basis of Well Design (BOWD) and rationale for design of the well, the well cost compilation and the project schedule. The report addresses the revised drill target on the Baleen prospect initially announced with total depth of 2,150 metres on seismic data line B4-18. As advised Advent now intends, subject to approvals and funding, to undertake deeper drilling to also undertake evaluation of the Offshore Sydney Basin for carbon sequestration (storage). This has resulted in a revised specification for a well to target early Permian sandstones for both hydrocarbon and carbon sequestration potential with a revised total depth being set at 3,150 m.

Add Energy has commissioned the Xodus Group to undertake a preliminary environmental screening assessment of the proposed Baleen well activity. Xodus Group are a leading global energy environmental consultancy with a strong track record in the Australian offshore sector where they are experts in environmental impact assessment and regulatory approvals. This will be aided by the pre-existing environmental information which exists from the Environmental Plan accepted by NOPSEMA for the 2D Seismic survey carried out in 2018. The screening will identify the work required to undertake an environmental impact assessment to support the required approvals. The aims of the preliminary environmental impact assessment are to:
1. Produce a detailed summary of required technical inputs;
2. Produce a detailed summary of required environmental inputs;
3. Outline a proposed approach for stakeholder consultation; and
4. Identify key controls potentially required to manage the activity

Advent has appointed a Contracts Manager for its PEP 11 Baleen well project. The late 2019 application to NOPTA by the operator Asset Energy Pty Limited and Bounty to change the current Permit conditions to proceed with the drilling of an exploration well and to extend the Permit term until March 2023 was still pending at the end of the quarter.

Geosequestration
The Offshore Sydney Basin offers the potential opportunity for NSW to make deep cuts in its CO2 emissions through CCS-Carbon Capture and Storage (geosequestration of CO2 emissions).

CCS is part of a suit of solutions with the potential to mitigate greenhouse gas emissions and help address climate change. The Joint Venture has engaged a leading expert to advise on the geosequestration potential of certain Permian age sands at the Baleen area in PEP 11.


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