USA
NEW CALEDONIA
AUSTRALIA
PAPUA NEW GUINEA
KESTREL ENERGY, INC.
Greens Canyon Gas Project, Green River Basin, Wyoming, USA
Victoria Petroleum NL Interest (Indirect) - 19.4%
Victoria Petroleum NL through its 19.4% shareholding in the US NASDAQ listed company Kestrel Energy, Inc. has an 19.4% indirect interest in the exploration development activities of Kestrel Energy, Inc. in the major gas bearing Green River Basin, Wyoming, USA.
Further to the initial success of encountering 8 metres of net gas pay in the Frontier formation in the first Greens Canyon Gas Project well, Greens Canyon-1 (UPRC #27-3), Kestrel Energy, Inc. announced on December 30, 1999 that the second well drilled, Greens Canyon-2 (UPRC #29-2) as well as encountering good gas shows and sand development in the Frontier formation as encountered in Greens Canyon-1, also drilled an additional two pay zones in the deeper Muddy and Dakota formations.
Log analysis by Schlumberger indicated as much as 100 feet of pay was indicated by the logs in the three zones, as reported in the attached Strains Consultants Research Report of March 30, 2000.
Kestrel Energy, Inc. commenced laying 27 kilometres of pipeline in March 2000 prior to the April 2000 fracture stimulation and testing of the net 8 metres of gas-bearing Frontier Formation drilled in Greens Canyon-1 (UPRC # 27-3) and the three gas bearing zones drilled in Greens Canyon-2 (UPRC #29-2).
The successful fracture stimulation and testing success at Greens Canyon-1 subsequent to the quarters end in late April 2000 resulting in the flow of gas to surface at commercial rates, has considerably enhanced the potential economic value of the Greens Canyon Gas Project and the approximately 20,000 acres in the Green River Basin that Kestrel has the right to explore and develop in the immediate vicinity of the Greens Canyon Prospect.
The Greens Canyon Gas Project wells Greens Canyon-1 and Greens Canyon-2 are both within 1 mile of the Pointevent Federal-1 well which indicated from previous testing in November 1998, that a significant gas resource is present in the area in at least three Cretaceous formations, the Dakota, the Muddy and the Frontier, from the deepest to the most shallow respectively.
Due to the known presence of gas in the vicinity of and in the Greens Canyon-1 and Greens Canyon-2 wells, the Greens Canyon Gas Project can be considered to be a low-risk exploration/development project with gas production rates from the target Cretaceous zones dependant on successful drilling completion technique and fracture stimulation.
The target Cretaceous sands within the total Green River Basin area have been estimated by the Gas Research Institute of Colorado to contain proven reserves of 2.3 trillion cubic feet of gas and estimated probable reserves of 16.1 trillion cubic feet of gas.
A research report on Kestrel Energy, Inc. updated on March 30, 2000 by Strain Consultants Inc., a recognised consultant group that specialises in the analysis of small US oil and gas explorers and producers, indicates that if the Greens Canyon-1 (UPRC # 27-3) and subsequent wells are successful, the ensuing 25 well development program for the Greens Canyon Gas Project has the unrisked potential to contain 152 billion gross cubic feet of gas and significantly impact on Kestrel's finances and its existing oil and gas reserves base.
A copy of the March 30, 2000 Strain Consultants Inc.'s research report on Kestrel Energy, Inc. is attached to this quarterly report.
Victoria Petroleum NL believes that continuing development and exploration success by Kestrel Energy, Inc. in its Green River Basin, Greens Canyon Gas Project and adjoining acreage will provide a relatively low risk opportunity to increase the value and asset backing of Victoria Petroleum NL through the 1.4 million shares that Victoria Petroleum NL holds in Kestrel Energy, Inc.
Kestrel Energy, Inc the Operator of the Greens Canyon Gas Project, has a 100% Working Interest in the Greens Canyon Gas Project drilling program
San Joaquin Basin, California, USA
Victoria Petroleum N.L. Interest 100%
Victoria Petroleum N.L. through an agreement with Kestrel Energy Inc. announced on February 29,2000 and subsequently approved by Victoria petroleum shareholders on April 20, 2000 has increased its previous 50% interest to a 100% interest in the petroleum exploration assets of the San Joaquin Basin Project (SJBP) area, located in the central San Joaquin Basin, California, USA.
The petroleum exploration assets in the SJBP area, consist of petroleum leasehold exploration properties approximately totalling 53 square kilometres and a data base including approximately 25,000 kilometres of seismic and well data for 3,800 wells, both analog and digital over the SJBP area of 21,000 square kilometres.
Exploration in the San Joaquin Basin will focus on structural plays adjacent to wells with oil and gas show or hydrocarbon recoveries. Exploration plays of this type should have a reduced exploration risk compared to the higher risk stratigraphic plays.
Significant industry interest has been ignited in the San Joaquin Basin with the November 23, 1998 major Bellevue-No.1 gas discovery and blowout. The Bellevue No.1 well which blew out at 17,646 feet at an estimated rate of 100 million cubic feet per day provides encouragement that the deep East Lost Hills Prospect has the potential to contain gas reserves in the order of 3-12 trillion cubic feet of gas.
The Bellevue discovery provides support for the Victoria Petroleum NL belief that significant undiscovered oil and gas reserves remain to be discovered in the area of interest covered by the San Joaquin Basin Joint Venture.
The EKHO Prospect, six kilometres to the east of the Bellevue No. 1 - East Lost Hills Prospect has as its target the same sands productive at Bellevue-No.1. Tri-Valley Corporation and a consortium of US and Canadian oil exploration companies commenced drilling EKHO-1 on February 7, 2000 as the initial test of the EKHO Prospect's reported potential to contain up to 4 billion barrels of oil and nine trillion cubic feet of gas in place.
This drilling will be of great significance to the San Joaquin Basin Project area, in which Victoria Petroleum has a 100% interest, as Victoria Petroleum NL's Pipeline Prospect lies within the EKHO Prospect. The EKHO-1 drilling will provide an effectively free evaluation of the potential of the Pipeline Prospect in which Victoria Petroleum NL has an estimated 16% net leasehold interest. The Pipeline Prospect is interpreted by Victoria Petroleum NL to contain up to 2.1 trillion cubic feet of gas and 346 million barrels of oil.
Victoria Petroleum NL considers the major risk with the Pipeline/EKHO Prospect is not the presence of the Victoria Petroleum NL interpreted resource of up to 2.1 trillion cubic feet of gas and 346 million barrels of oil, but the engineering ability to successfully produce at commercial rates to surface the indicated major oil and gas resource in the ground.
Additional to the Pipeline Prospect, the Kingfisher and Raven Prospects have been prepared for immediate drilling.
The Kingfisher Prospect is a seismically defined upthrown fault block prospect with rollover into the fault with an adjacent down dip well with strong oil shows. The prospect is considered to have the potential to contain oil and gas reserves up to a maximum of 25 million barrels of oil and 46 billion cubic feet of gas, if oil and gas are present.
The Raven Prospect is a seismically defined upthrown fault block prospect which is considered to have the potential to contain oil and gas reserves up to a maximum of 25 million barrels of oil and 44 billion cubic feet of gas, if oil and gas are present.
The cumulative maximum oil and gas target potential of the Kingfisher and Raven Prospects is 50 million barrels of oil and 90 BCF of gas, if oil and gas are present.
Drilling of the Kingfisher Prospect is planned to commence June 2000 with the Raven Prospect in July 2000, subject to farmout.
Victoria Petroleum NL currently has a 100% interest in these two prospects. The company has received strong US farmin interest in the drilling of Kingfisher and Raven which should result in Victoria Petroleum having a near free-carried 20% interest after farmout.
Ongoing geophysical and geological definition of several other major gas and oil prospects is in progress in order a drilling program of up to four wells over the next twelve months will take place in the San Joaquin Basin Project area, subject to rig and lease availability.
Victoria Petroleum N.L. considers it has acquired a significant core position in the San Joaquin Basin which is highly prospective for oil and gas with 12 billion barrels of oil and 12 trillion cubic feet of gas produced to date. The United States Geological Survey has estimated that the San Joaquin Basin has the potential to contain an additional 1.2 billion barrels of recoverable oil.
Entry into the San Joaquin Basin Project area provides Victoria Petroleum N.L. with an interest in an extensive geological and geophysical data base which provides a major opportunity to explore the San Joaquin Basin. Geophysical and geological interpretation of the extensive data base of seismic and well data indicates the presence of at least twenty one prospects and leads with a possible target size of up to 877 million barrels of oil equivalent, if hydrocarbons are present.
As Victoria Petroleum increase its leasehold position in the basin, some of these prospects and leads may become future drilling targets, subject to lease and rig availability.
Exploration success in the San Joaquin Basin Project drilling program has the potential to significantly increase Victoria Petroleum N.L.'s asset and reserves base as a result of the potential size of the drilling targets selected.
Kestrel Energy California, Inc., a wholly owned subsidiary of Victoria Petroleum NL is the Operator of the San Joaquin Basin Project area.
PRA 436; New Caledonia
Victoria Petroleum N.L. Interest - 24.1%
Victoria Petroleum NL, and its partners, Sun Resources NL and private US Investor clients of Monoco Petroleum, Inc. completed the sidetrack drilling and testing of Cadart-1 on the Gouaro Anticline, a major surface anticline onshore New Caledonia, 200 kilometres north east of Noumea on 17th February 2000.
Cadart-1 commenced drilling on 24 November 1999 and reached a total depth of 1,930 metres on 30 January 2000 prior to sidetracking.
Initial pre drill encouragement for the presence of hydrocarbons in the Gouaro Anticline was provided by the oil and gas shows seen in the Gouaro 1 and 2 wells previously drilled on the Gouaro Anticline in 1954/55. These old wells were quite shallow and only penetrated 608 metres into the structure, falling far short of the seismically derived target horizon at 1,280 metres. The oil and gas shows in the two shallow wells, Gouaro 1 and Gouaro 2 do confirm that hydrocarbons have migrated through the Gouaro Anticline.
Further confirmation for the presence of oil and gas in the Gouaro Anticline was provided while drilling Cadart-1 by the cores bleeding live oil from fractures in the non reservoir overlying seal unit of shales and siltstones over the interval of 748 metres to 1,015 metres and 1,585-1,643 metres, and the results of Drill Stem Test No. 2 (DST #2).
Drill Stem Test No. 1 (DST #1) carried out over interval 1,538-1,617 metres to test the first potential reservoir under the regional overlying shale/siltstone seal recovered gas cut drilling mud in the bottom of the test string, but failed to recover true formation fluid.
DST #2 carried out over the open hole interval 1,619 metres to total depth 1,930 metres produced a gas flow to surface at an estimated rate of 200,000 cubic feet per day, prior to the well bore bridging off and blocking flow from the fractured sandstones most likely contributing the gas.
In light of the gas to surface of DST#2, which was surprising in view of the poor shows while drilling the interval 1,619-1,930 metres and apparent lack of reservoir potential, as significant lost circulation while drilling was not observed, the partial lost circulation zone not fully tested by DST #1 was attempted to be re-drilled with a sidetrack in order to be more fully tested.
Victoria Petroleum NL as Operator and its participating partners in the sidetrack and re-test of Cadart-1, are of the view that as 140 barrels of drilling mud were lost to the zone tested by DST #1, and only 40 barrels of drilling mud was recovered on DST #1, the well killed itself and the true potential of this zone to contain and flow hydrocarbons has not been evaluated.
Unfortunately drilling problems prevented the redrilling of the partial lost circulation zone at 1,534 metres, which subsequently was not retested.
In the event of the discovery of hydrocarbons that flow to surface with future drilling on the Gouaro Anticline, a major ready market for gas to electricity from 6 million cubic foot per day up to 50 million cubic foot per day, potentially increasing to 100 million cubic foot per day in 2003, and attractive gas prices is available for the adjacent industrial and nickel refining operations in New Caledonia.
Victoria Petroleum NL considers the frontier nature of oil and gas exploration in New Caledonia is more than offset by the oil shows seen in cores and gas flow to surface on drill stem in the current drilling at the Cadart-1 drill location, and the extremely strong market demand for any locally discovered and produced hydrocarbons to replace the current 2 million barrels of diesel and fuel oil imported each year to generate electricity for New Caledonia.
In view of the confirmation of the hydrocarbon prospectivity of the Gouaro Anticline with the gas flow to surface from Cadart-1, strong consideration is being given to an application for a new exploration permit over the area.
Victoria Petroleum NL is the Operator of the Cadart-1 drilling project and the PRA 436 Joint Venture.
Victoria Petroleum NL has a 9.31% interest in the Part 2 Sage block and 6.17% interest in the remaining area of WA-254-P.
The permit comprises four non-contiguous graticular blocks covering 322 square kilometres on the southern extension of the Legendre trend which contains the Legendre and Talisman Oil Fields. Three prospects and six leads have been interpreted as present in the permit.
In April 1999 the Sage block provided Victoria Petroleum NL's first offshore drilling oil discovery Sage-1, drilled on the sage Prospect. Sage-1 tested 2,155 barrels of 48.8 degree API oil per day on a half inch choke from the Saffron Sandstone interval from 1909-1934 metres.
The Sage Prospect in WA-254-P Part 2, lies 35 kilometres south of the 150 million barrel Wanaea Oil Field, and 4 kilometres to the north-east of the Saffron-1 oil and gas discovery in WA-1-P held by BHP / Woodside / Santos / Apache.
The discovery of oil on the Sage Prospect is highly encouraging with the full commercial significance of this discovery required to be further determined by the drilling of a Sage-2 to determine the extent of the oil accumulations discovered in the 3 zones, the Saffron Sandstone, the Intra-Muderong P. Burgeri sand and Jurassic Angel Sandstone formation.
Reinterpretation of the 3D seismic data over the prospect, integrating the latest seismic velocity and depth conversion processing techniques, is currently in progress by the operator for the permit, Apache Energy, to determine the technical risk in drilling a Sage-2 appraisal well.
Victoria Petroleum NL has participated in an independent first-pass seismic interpretation of the Sage Prospect incorporating the Sage-1 discovery well results. This seismic interpretation indicates the Sage Prospect may have the potential to contain recoverable reserves of up to 26 million barrels.
The operator for the WA-254-P, Apache Energy, is also reviewing the technical risk associated with the drilling of the Argos Prospect which has previously been interpreted to have the potential to contain up to 17 million barrels of oil in the target Cretaceous sands, if oil is present.
A review of the Nicol Prospect is also in progress to determine the exploration risk for this prospect and its possibility as a candidate for drilling within the next six months.
Victoria Petroleum NL concludes that further exploration drilling will take place in WA-254-P within the next 6 months given the proved presence of oil within the permit and the number of remaining prospects. Victoria Petroleum NL plans to participate in this drilling at its current level of interest.
WA-261-P - Offshore Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest - 5%
WA-261-P covering an area of 299 square kilometres is located immediately to the south and adjacent to the Apache Energy / Santos Limited Permit, WA-209-P containing the 45 million barrel Stag Oil Field. The Stag Oil Field commenced production in June 1998 with planned production of 25,000 barrels of oil per day.
Several leads and prospects with targets at the same producing horizon as the Stag Oil Field and deeper Jurassic, Triassic and Permian structural targets are seismically interpreted to be possibly present in WA-261-P.
The most significant of these prospects is the Rehbok Prospect, a Stag sand stratigraphic pinchout play interpreted from seismic data to have the potential to contain up to 39 million barrels of oil, if oil is present. The Rehbok Prospect is downdip of Longhorn-1 and 4 kilometres south of the Stag oil field.
Seismic analysis of the Rehbok Prospect is currently underway to define a possible drill location for Rehbok-1, with possible drilling in the second half of 2000. Victoria Petroleum NL will contribute to the drilling of the Rehbok Prospect at its current level of interest should drilling be proposed by the operator Apache Energy.
Apache Energy is the Operator of the WA-261-P Joint Venture.
EP 325 - Offshore Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest - 12%
Victoria Petroleum N.L. has a 12% interest in the predominantly offshore Carnarvon Basin Permit EP 325. EP 325 covers an area of 1,093 square kilometres in the Exmouth Sub-basin of the central Carnarvon Basin and contains the Rivoli Gas Field.
Exploration in EP 325 has focused on the western area of EP 325 where several prospects and leads including White Opal, Cooper and Whalebone have been interpreted as present by the previous Operator, Mobil Exploration and Production Pty Ltd.
The White Opal Prospect, in the north western part of EP 325, pre drill was interpreted from seismic data to have the most likely case potential to contain up to 247 million barrels of oil or 880 million cubic feet of gas in the target Triassic sands, if hydrocarbons were present. White Opal-1 commenced drilling on March 10, 2000 from an onshore drilling location and reached a total depth of 2,597 metres on 31st March, 2000. Wireline logs indicated the target Triassic Mungaroo sandstones contained minor residual hydrocarbons and the well was plugged and abandoned.
The 1 trillion cubic feet Macedon Gas Field, 15 kilometres to the north and the Leatherback Triassic oil discovery, 15 kilometres to the north-east respectively of the permit and the 20 billion cubic feet Rivoli Gas Field, within the permit are encouraging for the presence of further gas and oil fields in the permit.
Future exploration will focus on development of the gas potential of the Rivoli Gas Field and exploration of the 25 million barrel oil or 32 BCF gas potential Cooper Prospect.
EP 359 - Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest - 27.9%
EP 359 covers an area of 1,954 square kilometres situated in the Carnarvon Basin predominantly onshore on the Cape Range Peninsula and partially offshore in the Exmouth Gulf.
Following renewal of the permit for a further five years, the review of existing leads and prospects and the generation of new plays is the current focus. The recent offshore oil discoveries by Woodside in the Exmouth Sub-basin has re-kindled interest in this area of the Carnarvon Basin. Evaluation of the future exploration potential of EP 359 will continue to determine further possible drilling locations.
Victoria Petroleum N.L. is the Operator of the EP 359 Joint Venture.
EP 41, Parts 1 and 2 - Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest - 88%
EP 41 parts 1 and 2, cover an area of 393 square kilometres situated onshore and partially offshore in the Carnarvon Basin on the Cape Range Peninsula and Exmouth Gulf. The historically significant site of the first major oil flow in Australia, Rough Range-1, lies within EP 41 Part 3, adjacent to EP 41 Part 1.
The most recent exploration activity in EP 41 was the Rough Range East seismic survey carried out in mid 1995. Incorporation of this seismic survey into the existing seismic and geology data base of EP 41 indicates modest reserve size prospects are present on the Rough Range fault trend and its extension into the Exmouth Gulf. Further interpretation of this data is planned to determine future possible drilling locations in EP 41, Parts 1 and 2.
The May 2000 drilling of Rough Range-1B, Rough Range Central and Rough Range South-1 by Empire Oil, in the adjacent EP 41 Part 3 will refocus interest on this historic area.
Victoria Petroleum NL is the Operator of the EP 41 Parts 1 and 2 Joint Venture.
ATP 333P - Bowen Basin, Queensland
Victoria Petroleum Interest - 100%
ATP 333P covers an area of 388 square kilometres on the western flank of the Bowen Basin in Queensland. The Reids Dome Gas Field is situated within ATP 333P and based on initial reservoir studies, a reserve of up to 1 billion cubic feet of gas is indicated for the four wells drilled on the Reids Dome Gas Field up to December 1994.
Following the experimental twenty five kilometre seismic program carried out in June 1994, interpretation has shown that seismic has the potential to delineate the gas bearing sands of the Reids Dome Gas Field.
A 25 kilometre seismic survey to extend the seismic coverage and to define additional shallow gas sand drilling locations was carried out in July 1995 and indicates the potential for a shallow gas reserve of up to 20 billion cubic feet of gas if gas is present. An analysis of the results of the only deep well drilled on the Reids Dome, Reids Dome-1 drilled to 2760 metres in 1954, indicates that additional significant gas potential of up to 330 billion cubic feet of gas may be present in the Reids Dome structure, if gas is present.
A further two to three shallow wells, or one deep well, are planned for drilling in the first half of 2000, subject to farmout. Final farmin negotiations with a potential farminee to carry out further exploration in the permit are in progress.
The Reids Dome Gas field lies 60 kilometres from the Roma-Gladstone gas pipeline and requires an indicated minimum gas reserve of 10 billion cubic feet of gas to be economic.
Victoria Petroleum NL is the Operator of the ATP 333P Joint Venture.
ATP 465P - Bowen Basin, Queensland
Victoria Petroleum N.L. Interest - 20%
ATP 465P covers an area of 539 square kilometres within the central portion of the Bowen and Surat basins in Queensland.
North Cherwondah-1 was drilled in November 1996 by the Operator, Roma Petroleum N.L. as an updip test to the gas flows encountered in Triassic Rewan sandstones in Cherwondah-1, 250 metres to the south. Gas flows of up to 300,000 cubic feet per day were recorded through the target Triassic sandstone section in the depth range 1,270 metres to 1,472 metres.
Future exploration in ATP 465P will focus in delineating the gas potential of the Cherwondah Anticline in the deeper Permian sands of the Gyranda Formation, the potential of horizontal drilling to enhance gas production rates in the Triassic tight gas Rewan sandstones and the coal bed methane potential of the north eastern area of the permit adjacent to the adjoining Oil Company of Australia coal bed methane Peat gas field.
Development of the Peat coal bed methane gas field will result in a gas pipeline passing through ATP 465P. The presence in the future of this gas pipeline will serve to enhance the commerciality of any producible gas reserves delineated in ATP 465P.
A farmout agreement has been entered into with Queensland Gas and Coal NL (QGC) whereby QGC will earn a 60% interest in the shallow Jurassic coal bed methane by drilling two wells.
Roma Petroleum NL is the Operator of the ATP 465P Joint Venture.
ATP 471 P - Weribone Block - Surat Basin, QLD
Victoria Petroleum Interest - 20.65%
This 12 square kilometre sub block of the greater ATP 471P located in the Surat Basin in central Queensland contains the Yarrabend-5 gas well which may be part of the Yarrabend-5 Gas Field in adjacent licences to the north.
Recommendations have been made by the Operator, Oil Company of Australia for the Yarrabend-5 gas well to be production tested to determine the gas deliverability of the Yarrabend-5 gas well and its possible recoverable gas reserves of up to 0.61 billion cubic feet. In the event that commercial rates of gas production are observed for Yarrabend-5, it is expected that the Yarrabend-5 would be tied into the existing production infrastructure and gas pipeline network 1.5 kilometres to the north.
Oil Company of Australia is the Operator of the Weribone Block.
ATP 560P, Eromanga Basin, QLD
Victoria Petroleum Interest - McIver Block - 50%
This 100 square kilometre sub block of permit ATP 560P is located in the central Eromanga Basin of southwest Queensland.
The McIver Prospect situated on the north-south trending Canaway Ridge was drilled in May 1997 to a total depth of 1,405 metres without encountering significant hydrocarbon shows in the target Jurassic sandstones.
Evaluation of the future exploration potential of the other prospects in the McIver Block is in progress.
Victoria Petroleum N.L. is the Operator for the McIver Block.
ATP 560P, Eromanga Basin, QLD
Victoria Petroleum Interest - Ueleven Block - 17 %
This 105 square kilometre sub block of permit ATP 560P is located in the central Eromanga Basin of southwest Queensland.
The Ueleven Prospect is situated updip from the Bargie Oil Field, 25 kms to the west. It was drilled in November 1997 to a total depth of 1189 metres. Excellent reservoirs were drilled in the target Jurassic / Hutton Sandstone but hydrocarbons were not encountered.
Further evaluation of the remaining prospects and leads in the Ueleven Block is planned by the Operator for the Ueleven Block, Lakes Oil N.L.
ATP 574P - Bowen Basin, QLD
Victoria Petroleum Interest - 75%
ATP 574P covers an area of 616 square kilometres within the central and southern portions of the Bowen and Surat Basins in Queensland.
Several wells have been drilled within the permit, with the only commercially hydrocarbon discovery being the Jurassic Conloi Oil Field. The one well Conloi Oil Field discovered in 1964, is currently shut in, but has produced 17,000 barrels of oil from the Jurassic Evergreen sandstone.
Future exploration in ATP 574P will focus on the delineation of potential development drilling locations adjacent to the Conloi-1 well. A review of existing well data shows that there may be a by-passed 4 metre oil column in an old abandoned well in the permit Giligulgul-1. This evaluation has resulted in the definition of the North Giligulgul Prospect, interpreted from reprocessed seismic, well and drill stem test data to have the potential to contain updip oil potential of up to 19 million barrels, if oil is present.
The drilling of North Giligulgul-1 is planned for July/August 2000, subject to farmout.
The potential for gas production from the deeper Triassic reservoirs in the permit has also been upgraded. The expansion of coal-bed methane plays in the Surat Basin has led to a farmin offer from QGC to drill up to three coal-bed methane exploration wells in the permit.
Victoria Petroleum N.L. is the Operator for the ATP 574P Joint Venture.
ATP 589P - Cooper/Eromanga Basin, QLD
Victoria Petroleum NL Interests:
ATP 589P Part 1: Barcoo Block - 60%, Springfield and Regeleigh block - 24%, Bright spot block - 15%,
ATP 589P Part 2: Moonscape Block - 60%,
Victoria Petroleum N.L. has varying interests in ATP 589P in accordance with the relevant farmouts in ATP 589P which covers an area of 15,301 square kilometres in the southwest Queensland portion of the Cooper / Eromanga Basin. This Cooper / Eromanga Basin Permit is adjacent to the Energy Equity permit containing the 9.4 million cubic feet per day Bunya-1 gas discovery and the Oil Company of Australia 4 million cubic feet per day Thylungra-1 gas and condensate discovery.
In late 1997, under the terms of the Icon Oil N.L. ATP 589P Farmin Agreement, Icon Oil drilled Springfield East-1, Regeleigh North-1 and Brightspot-1. This drilling resulted in a non commercial gas discovery at Springfield East-1 with a gas flow of 200,000 cubic feet per day from a Permian Sandstone. Although the gas flow from Springfield East-1 was non commercial, this result is considered encouraging for the future Permian gas potential of the southwest area of ATP 589P.
Significant Jurassic oil potential has also been interpreted to be present in ATP 589P based on the oil shows in the numerous wells drilled in the permit and the extensive seismic data grid. The 30 million barrel potential Barcoo Junction and 36 million barrel potential Moothandella prospects have been interpreted from this data, if oil is present.
Several other prospects and leads identified in ATP 589P (1) adjacent to the Barcoo Junction area and Moothandella are being been evaluated as potential future farmout drilling targets.
The recent round of exploration activity by Energy Equity in the adjacent permit to the west of ATP 589 (1) and the recent completion of the southwest Queensland to Mt. Isa gas pipeline confirm the strategic exploration value of the acreage position that Victoria Petroleum N.L. holds in this area of the Cooper / Eromanga Basin.
Victoria Petroleum NL is the Operator for the Barcoo and Moonscape Blocks of ATP 589P.
ATP 593P - Surat Basin, QLD
Victoria Petroleum Interest - 60%
ATP 593P situated on the western margin of the Surat / Bowen Basin covers an area of 3,930 square kilometres. The primary targets in the permit are structural traps along the Merivale High trend which is the southern extension of the Merivale Fault system, along which the majority of the Denison Trough fields are located. Ten leads and prospects have been mapped along the Merivale High trend with the potential to contain up to 84 million barrels, if hydrocarbons are present.
Interpretation of the existing seismic data in ATP 593P identified the Heather Downs and Heather Downs West Prospects as Hutton / Precipice sandstone four way dip closed structures, updip to the strong residual oil shows in the Hutton / Precipice sandstones of Don Juan-1 and Flaneur-1, 26 kilometres to the north.
Heather Downs-1 was drilled in June 1998 on the Heather Downs Prospect to a depth of 835 metres, with a residual oil show observed in a basal Birkhead sandstone. Significant updip potential is considered present, with the Heather Downs Prospect interpreted to still have the potential to contain up to 20 million barrels of oil, if oil is present.
An updip test of the Heather Downs Prospect is planned for the second half of 2000, subject to farmout and rig availability.
Victoria Petroleum N.L. is the Operator for ATP 593P.
ATP 608P Surat Basin, QLD
Victoria Petroleum Interest - 34.22% in Rookwood Block; 60% in Remainder
The permit covering an area of 6,800 square kilometres is located in the western Surat Basin adjacent to several oil fields and includes the zero edge of the Boxvale sandstone, the primary producing reservoir in the area. Several four way dip closures are mapped and ready for drilling.
A possible untested Boxvale Sandstone zone in Rookwood-1 is considered present, indicating a potential target of up to 13 million barrels in the Rookwood Prospect, if oil is present.
A redrill of the Rookwood Prospect is planned for the second half of 2000, subject to farmout.
Victoria Petroleum NL is the operator of the ATP 608P Joint Venture
EPP 24 - Otway Basin, SA
Victoria Petroleum Interest - 6.67%
Victoria Petroleum N.L. has a 6.67% interest in EPP 24 which covers an area of 1,949 square kilometres in the offshore portion of the Otway Basin, adjacent to Robe, South Australia.
EPP 24 contains the 1994 Troas gas discovery of up to 418 billion cubic feet of gas. Several other major structures remain untested in EPP 24. A 314 kilometre seismic program was carried out in December 1997 to further evaluate the potential of these major structures.
Victoria Petroleum N.L. considers the offshore Otway Basin to have all the parameters to be a future major oil and gas province.
Boral Energy Limited is the Operator of the EPP 24 Joint Venture.
PEL 57 - Otway Basin, SA
Victoria Petroleum Interest - 10%
Victoria Petroleum N.L. has a 10% interest in PEL 57 which covers an area of 794 square kilometres in the onshore Otway Basin.
Interpretation of the 16 kilometre seismic survey carried out in the first quarter of 1998 in the McNamara Prospect area indicates a potential target size of up to 120 BCF of gas. Interpretation of this data is currently in progress to finalise a late 2000/early 2001 drilling location on the McNamara Deep Prospect.
The ongoing gas discoveries by Boral in the adjacent Katnook-Haselgrove area to the north of PEL 57, confirm the hydrocarbon potential of this portion of the onshore Otway Basin.
Boral Energy Limited is the Operator of the PEL 57 Joint Venture and the adjacent Katnook/Hazelgrove gas fields.
The drilling of Tumuli-1 in the eastern part of the permit commenced at 0900 hours on 6 April 1999. Tumuli-1 was drilled to a total depth of 2026 metres without testing the target Toro, Pnyang and Digimu Sandstones as a result of difficult drilling conditions.
Future exploration work in PPL 213 by the Operator Santos, will focus on the significant future exploration potential considered present in the western part of the permit in and around the Ok Tedi area.
PPL 202 - Papuan Basin, Papua New Guinea
Victoria Petroleum Interest - 15%
The original PPL 106 joint venture participants under the Santos operatorship are participating in the 3,790 square kilometres petroleum Prospecting Licence 202, in part southern adjacent to PPL 213 and northern adjacent to PPL 157, to pursue potential further significant prospects in both the Fold Belt and Foreland areas of the Papuan Basin, Papua New Guinea.
The Joint Venture considers the area as being cursorily explored with only one well, Tarim-1, drilled in 1990 the northern portion of the licence. Gas and trace condensate were tested from the Toro Digimu Sandstones over the interval 3,978 metres to 3,499 metres. Good oil shows within sandstones of the overlying Alene Member remained untested due to mechanical problems with the well.
Encouragement from the significant Elevala gas/condensate discovery (1 TCF/60 MMBOC) and its yet explored downdip oil-leg potential in the south bounding PPL 157 also promotes Foreland prospectivity. Positive aeromagnetic anomalies in PPL 202 from broadly gridded surveys, show potential for large hydrocarbon accumulations associated with sediment drapes, over unexplored basement highs, a similar setting to the Elevala gas/condensate discovery.
Although exploration is at a very early stage, the work is revealing considerable promise of a significant discovery in the permit. Reinterpretation of 1989 seismic grid data overlapping the permit from southern abutting PPL 157, has led to the identification of a significant Elevala style prospect named Stanley, which extends into PPL 202 from PPL 157, and the Champion Prospect, a new play, 10 kilometres to the northwest inside PPL 202. These prospects are large structures. Stanley contain stacked Jurassic (Toro) to Paleocene (Ieru) age sand reservoirs, whilst Champion is likely to contain only the latter.
The overlapping Stanley Prospect was drilled by the PPL 157 Joint Venture in the quarter to a total depth of 3,219 metres at a location within 680 metres of the PPL 202 boundary. A 7.8 metre net gas/condensate pay was discovered in the Toro Sandstone in an excellent reservoir which if proved by subsequent development drilling may have the potential to contain gas reserves of 200 BCF or more. The well was suspended to test at a latter date with a workover rig and the large Parker 160 rig was released to drill Tumuli in PPL 213.
Future Exploration work in PPL202 by the Operator Santos will focus on the significant future exploration potential considered present in the permit.
Victoria Petroleum N.L., through its wholly owned subsidiary Victoria International Petroleum N.L. holds 19.4% of the Common Stock of Kestrel Energy, Inc.
Kestrel Energy, Inc's exploration and development activities for the quarter focused on the Green River Basin in Wyoming, USA and the San Joaquin Basin, California, USA. The details of this activity are presented in previous sections of Victoria Petroleum NL's interest in these areas through Victoria Petroleum NL's shareholding in Kestrel Energy, Inc.
Kestrel Energy, Inc. is an active publicly listed NASDAQ US oil and gas production and exploration company, NASDAQ code "KEST".
For the quarter ending March 31, 2000, total Kestrel and Victoria Exploration Inc. nett oil and gas production for the quarter is estimated at 14,500 barrels of oil-equivalent for an average estimated daily production of 160 barrels of oil equivalent per day.
Yours faithfully,
JOHN KOPCHEFF
MANAGING DIRECTOR
VICTORIA PETROLEUM N.L.
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