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USA
AUSTRALIA
NEW CALEDONIA
PAPUA NEW GUINEA
CALIFORNIA
Victoria Petroleum continued over the past quarter to target oil and gas prospects in the prolific hydrocarbon basins of California, USA, a core operations and exploration area for the past four years. The basins targeted are the San Joaquin and Salinas Basins.
SAN JOAQUIN BASIN
VICTORIA PETROLEUM N.L. INTEREST: 25.25-100%
The San Joaquin Basin to date has seen production of some 9 billion barrels of oil and 11 trillion cubic feet of gas from discoveries of 12 billion barrels of oil and 12 trillion cubic feet of gas. The basin has excellent pipeline infrastructure which delivers oil and gas to the major coastal based population and industrial centres, in particular San Diego, Los Angeles and San Francisco.
Natural gas has been an attractive exploration target as the California energy supply problems of the world's sixth largest economy will be revisited at some time in the future.
As Australian domestic gas prices approximate US$1.30 to US$1.50 per gas unit and are less than Californian prices, prospects in the San Joaquin Basin are a priority, exploration and development investment for Victoria Petroleum. The excellent local pipeline infrastructure ensures rapid development of any discovery and delivery to a large energy consuming market.
Highlights of the last quarter and future events in the company's active California exploration drilling operations follow.
Eagle Oil Pool Development Project - 25.25% Interest
The Eagle Oil Pool Development Project is targeting a stratigraphic trap, containing up to 24 million barrels of oil and 62 billion cubic feet of gas in the Upper and Lower Gatchell Sandstone. The initial stage of development of the Eagle Oil Pool is planned to be carried out by initially re-entering and developing the lower reservoir sand from the Mary Bellocchi-1 well by a combination of a vertical sidetrack from casing and reservoir development by horizontal drilling technology.
In 1986, the Mary Bellocchi-1 well flowed 223 barrels of 42° API oil per day and 820,000 cubic feet of gas per day before excessive water from a poor cement job and migration of fines interfered with the flow of hydrocarbons.
It is believed that horizontal drilling technology, not available in the mid 1980's, should solve the engineering problems that occurred during completion and testing of the vertical well and importantly result in a three to four fold increase in oil and gas flow rates. Prior to the re-entry of Mary Bellocchi-1 and commencement of development operations at Eagle No. 1 in May 2001, in excess of 100 barrels of gassy, clean 42° API oil was produced from the well bore during clean up operations and tanked.
Regrettably, the May-July 2001 development drilling of Eagle No. 1 to a depth of 4,330 metres measured depth was plagued by mechanical problems which caused non completion for production testing of the 271 metre horizontal leg drilled within the Upper and Lower Gatchell Sandstone.
However, interpretation of well data indicates a gross section of 131 metres (net of oil pay 91 metres) was intersected in the near horizontal well bore over the interval, 4,177 metres to 4,207 metres (30 metres) in the Upper Gatchell and 4,229 metres to 4,330 metres (101 metres) in the Lower Gatchell.
This net section ("pay") was noted to have good to excellent porosity and in spite of the high mud weight used in drilling, indications of hydrocarbons were present, namely suppressed fluorescence and C1 to C6 hydrocarbon readings. Of importance is the fact that the pay is some 6 to 7 times the extent of the combined vertical thickness of the Gatchell sands encountered in the adjacent Mary Bellocchi-1 well which flowed 223 barrels of oil and 820,000 cubic feet of gas per day to the surface in 1986.
This method of proposed completion to recover hydrocarbons to the surface is not uncommon in the USA.
The technical difficulties encountered while drilling the horizontal leg have prevented immediate testing of the interpreted 91 metres of oil pay. In mid August 2001, Eagle No. 1 was suspended and cased with a 4½" liner string and drill pipe as an intermediate casing string to a depth of 3,939 metres, 238 metres above the Gatchell oil zone so that completion and testing of the target Gatchell Sandstone oil zone with a coiled tubing unit and workover rig can take place.
The resumption of completion and testing operations of the suspended horizontal well bore in Eagle No. 1 is planned to take place in the second half of 2002 following the completion of the current engineering analysis, the resolution of a dispute with a joint venture partner and remaining fellow joint venture partner approvals. Victoria Petroleum plans to increase its interest in the Eagle Project.
The drilling results to date confirm that the Eagle Oil Pool Development Project is essentially low risk in geologic nature. The commerciality of the oil and gas reserves present in the Eagle Oil Field is dependent on the oil and gas flow rates that can be obtained from the horizontal well bores planned to be drilled into the field following successful completion and production testing of the Eagle No. 1 horizontal well bore.
Subsequent to the suspension of the Eagle No. 1 well for future completion and testing, the drilling rig under contract to Victoria Petroleum NL was moved to the Kingfisher Prospect, 60 kilometres to the southeast of Eagle No. 1.
Kingfisher Prospect - 32.37% Interest
The Kingfisher Prospect was a multiple target structural trap interpreted from seismic data to have the potential to contain significant reserves of oil and gas, within the Mya, Vedder, Domengine and Cretaceous target sands. Drilling commenced in September 2001 with the well drilled to a total depth of 4,275 metres.
Although moderate to good gas shows were encountered in the Mya, Vedder and Cretaceous sands drilled, subsequent wireline logs, and formation testing indicated the absence of commercial hydrocarbons.
However the wireline formation tester recovery of gas from the Cretaceous Morris sands at 4,100 metres confirms the migration of gas through the Kingfisher area and is considered to enhance the updip potential of the Cretaceous Morris sands in the Raven Prospect 5 kilometres to the east.
Significant oil and gas potential was also considered a strong possibility for the Monterey Formation McClure Shale sequence in Kingfisher No. 1. Support for the hydrocarbon potential of the Monterey Formation sequence in the Kingfisher Prospect area is provided by the strong Monterey Formation gas shows seen in adjacent wells, the reported Monterey Formation gas discovery of 3 TCF gas-in-place reported by Tri-Valley Oil and Gas Company at their Sunrise No. 1 well 10 kilometres to the south east and the Monterey oil production from the Shafter and Wasco areas, 16 kilometres to the south.
Your company is excited about the recent developments in the Shafter area where EOG recently announced a 127 development well program extending their Monterey trend horizontal drilling and fracturing activity north east to within 10 kilometres of the Kingfisher-Raven area. Several wells in the EOG area are reported to have flowed in excess of 1,000 barrels of oil per day.
Within the Kingfisher area, the Monterey Formation trend may have the potential for up to 22 million barrels of oil or several hundred billion cubic feet of gas in place based on the extrapolation of reported oil production from the Wasco/Shafter area on trend to the south, with the gas estimate based on the potential gas-in-place reserves for the adjacent Sunrise area, 10 kilometres to the east, reported by Tri-Valley Oil & Gas Co.
Confirmation of the hydrocarbon potential of the Upper Monterey McClure Shale horizon while drilling was provided by elevated total gas readings and gas shows over an interval of 126 metres from 2,393 metres to 2,518 metres with gas readings in excess of 100 units of total gas in 6 zones with net interval of 32 metres. The gas shows and increase in rate of penetration through the higher gas peak zones indicates favourable porosity, confirmed by subsequent wireline logs.
Further confirmation of the potential hydrocarbon potential of the Upper Monterey Zone was provided by the wireline logs which had similar characteristics to the logs from the producing Monterey zone on trend to the south.
Based on the very encouraging results obtained from the Upper Monterey McClure Shale formation while drilling and post well evaluation, it is considered that Victoria has a potentially significant Monterey Formation asset. Full realisation of the potential oil reserves in the Monterey will require a re-entry of the Kingfisher No. 1 well and the horizontal drilling and fracture stimulation of the best developed zone in the Upper Monterey McClure Shale. Victoria Petroleum plans to farmout its share of the costs of this horizontal drilling program, most likely in second half of 2002. Industry interest has been expressed in the Kingfisher horizontal drilling farmin opportunity.
Raven Prospect - 90% Interest
As part of the ongoing exploration program on the east side of the San Joaquin Basin, it is planned in late 2002 following farmout to resume drilling with the drilling of Raven No. 1 on the Raven Prospect, 5 kilometres to the north east of Kingfisher No. 1. The Raven Prospect is a seismically defined structural high-side fault block prospect, interpreted to have the potential to contain up to 75 million barrels of oil and 192 billion cubic feet of gas in multiple Monterey, Vedder, Allison, Domengine and Cretaceous target horizons.
The multiple hydrocarbon target zones expected in the Raven Prospect are anticipated to be drilled from 2,000 metres to the planned drill depth of 3,500 metres.
The Raven Prospect, like the Kingfisher Prospect is considered to be well positioned in the developing Monterey oil and gas production trend currently under active development by EOG and Texaco, 12 kilometres to the south.
A Monterey target of up to 22 million barrels of oil or several hundred billion cubic feet of gas-in-place is considered present in the Raven Prospect based on the Monterey drilling results at Kingfisher No. 1 and in the three wells drilled immediately adjacent to the Raven Prospect.
Strong industry interest has been expressed in the opportunity to participate in the drilling of the Raven Prospect as a result of its position on the newly developing Monterey Formation producing oil trend. The first participation agreement by an outside industry partner has already been signed.
At the time of drilling of the Raven Prospect in mid 2002, Victoria Petroleum NL plans to have a 34% near free carried interest.
Condor, Cockatoo, Pipeline & Vallecitos Prospects: 15-100% Interest
Adjacent to the Kingfisher-Raven area, Victoria Petroleum has also delineated the 100 billion cubic feet gas potential Condor and Cockatoo Prospects as candidates for drilling in the future following farmout, targeting the Monterey Formation and underlying Cretaceous Sands.
Victoria Petroleum NL also has a significant 19% interest in the Pipeline Prospect, situated 8kms to the east of the Bellevue-1 gas discovery well which blew out November 23, 1998 at a depth of 5,380 metres and estimated rate of 100 million cubic feet of gas and 3,000 barrels of oil per day.
The Pipeline Prospect is currently being evaluated at no cost to Victoria Petroleum by the adjacent well, EKHO-1 drilled by Tri-Valley Corporation. The EKHO-1 well is being prepared by the operator, Tri-Valley Corporation, for additional fracture stimulation and testing to determine the productivity of the deep gas sands encountered by drilling recently.
This testing will be of great significance to Victoria Petroleum NL as our Pipeline Prospect lies within the EKHO Prospect boundaries. EKHO-1 will provide an effectively free evaluation of the potential of the Pipeline Prospect, interpreted by Victoria Petroleum NL to contain up to 2.1 trillion cubic feet of gas and 346 million barrels of oil.
Your company is confident that in the event of a commercially successful completion and production testing program at EKHO-1 that Victoria Petroleum can attract a farminee to drill, complete and production test Pipeline No. 1 at no cost to Victoria Petroleum NL providing the company with a free carried interest in the well.
The Bellevue discovery on the western side of the basin and recent Monterey Formation oil production and development activity on the eastern side of the basin provide support for Victoria Petroleum NL's belief that significant undiscovered oil and gas reserves remain in the area of interest covered by the San Joaquin Basin Joint Venture.
SALINAS BASIN
VICTORIA PETROLEUM NL INTEREST 5-22.5%
San Antonio Prospect - 5% Interest
During the quarter Victoria Petroleum NL commenced the drilling of its first well in the Salinas Basin, California, 50 kilometres to the west of the San Joaquin Basin, San Antonio-1.
San Antonio-1 is the first well of Victoria Petroleum's ongoing 2002 California drilling program.
The San Antonio anticlinal Prospect is a dual target oil prospect interpreted to have the potential to contain up to 106 million barrels of recoverable oil in the target Vacqueros Sand and Monterey Shale horizons, if oil is present.
Although Victoria Petroleum NL considers the San Antonio-1 well drilling to be exploratory in nature, the potential for oil to flow from the target horizons is considered encouraging in view of the oil shows and oil flows of up to 206 barrels of 38° API oil per day observed in a down dip 1981 well drilled on the flanks of the anticline three kilometres to the northwest of the San Antonio-1 location and already observed in the Monterey Formation in San Antonio-1.
Further encouragement for the presence of oil in the San Antonio Prospect area is provided by adjacent production of 500 million barrels of oil from the San Ardo Field, 12 kilometres to the north.
Victoria Petroleum NL has a 5%* working interest in the San Antonio-1 well through its wholly-owned subsidiary Victoria Petroleum, Inc.
* After the recovery of drilling and completion costs from production from San Antonio-1, Victoria Petroleum's contributing interests in ongoing development and production will be 3.75%.
Any hydrocarbons discovered in the San Antonio-1 well and prospect are commercially very attractive as an oil and gas pipeline runs within 400 metres of the San Antonio-1 well site.
Vallecitos Oil Field - 22.5% Interest
Within the California area of operations, Victoria Petroleum NL will commence the drilling of the first well of up to a four well development drilling program in the Vallecitos Oil Field in May 2002.
Drilling of the first well, West Vallecitos-1 was to commence in late January/early February 2002 but has been delayed to April/May 2002 due to winter rains affecting the roads in the area.
Development drilling on the relatively shallow Vallecitos Oil Field has the potential to increase oil reserves by up to 5 million barrels and increase oil production rates to up to 1,200 barrels of oil per day assuming a successful four well development program.
The recent 2001 drilling program and the planned 2002 San Joaquin Basin drilling program is an appropriate culmination of Victoria Petroleum's detailed study and generation of prospects in the San Joaquin Basin prospect area over the last 5 years.
With the current price of oil around US$20 per barrel (A$38 per barrel) and the price of gas in the San Joaquin Basin of US$3.20 per thousand cubic feet (A$6 per thousand cubic feet) with the strong likelihood of higher gas prices being revisited in the future, commercial success is most likely for any sustained oil and gas flows discovered in any of the wells in the California drilling program.
KESTREL ENERGY, INC
VICTORIA PETROLEUM NL INTEREST - 18.4%
The Company, through Kestrel Energy, Inc., ("Kestrel"), has an indirect interest in Kestrel's net current proved oil and gas reserves as at June 30, 2001, of 2.6 million barrels of oil-equivalent, composed of 13.4 billion cubic feet of gas and 0.36 million barrels of oil with an undiscounted net future cash flow estimated at A$54 million and Net Present Value of A$27 million at a discount rate of 10%.
For the six months ending December 31, 2001 total Kestrel and Victoria Exploration Inc nett oil and gas production was 123 million cubic feet of gas and 11,637 barrels of oil for an average daily production of 180 barrels of oil equivalent per day.
DEVELOPMENT ACTIVITIES
GREENS CANYON PROJECT - GREEN RIVER BASIN, COAL BED METHANE PROJECT - POWDER RIVER BASIN, WYOMING, N.E. AMBER GAS FIELD DEVELOPMENT, OKLAHOMA, USA AND LAKE BOUEF GAS FIELD DEVELOPMENT, LOUISIANA.
Victoria Petroleum NL through its 18.4% shareholding in Kestrel Energy Inc remains confident that the gas development activity by Kestrel Energy Inc in Wyoming, in both the Greens Canyon Project, Green River Basin and Coal Bed Methane development drilling in the Powder River Basin and in the North East Amber Gas Field, Oklahoma, coupled with the relatively high price of domestic US gas and even higher Australian dollar value, will result in the investment in Kestrel Energy Inc becoming a significant asset for your Company.
WESTERN AUSTRALIA
EP 413
ONSHORE NORTH PERTH BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM NL INTEREST - 5.7685%
During the quarter, Victoria Petroleum NL entered into a farmout agreement with Voyager Energy Ltd whereby Voyager Energy Ltd will earn a 5.7685% interest in EP 413 by paying for Victoria Petroleum NL's share of the AFE drilling costs of the forthcoming Jingemia No. 1 well planned to be drilled in early June 2002.
The Voyager Energy Ltd farmin is subject to the normal joint venture and regulatory authority approvals.
Voyager Energy Ltd is an active North Perth Basin Explorer and is a participant in the Cliff Head oil discovery 15 kms to the west in the adjacent offshore Permit WA-286-P.
Victoria Petroleum NL considers the permit EP 413 to be very prospective and well placed for the presence of oil and gas, an opinion supported by the recent Arc Energy Hovea No. 1 oil discovery 5 kms to the north east and the Roc Oil Cliff Head No. 1 oil discovery 15 kms to the west in the adjacent offshore permit WA-286-P.
Regional structural mapping indicates a major structural trend and prospect to the west of the permit branching of the Cliff Head structural trend comes onshore to EP 413. Similarly the onshore Hovea structural trap style to the north east of the permit is mapped as present in EP413.
Within EP 413, the 60 km November 2001 seismic survey and recent January 2002 7 km seismic survey in the northern part of EP 413, has confirmed the Jingemia prospect approximately 5 kms to the south west of the Hovea Oil Field, as a target for drilling in EP 413.
Based on the recent January 2002 seismic survey and subsequent interpretation and mapping, the Jingemia Prospect is interpreted to have the potential to contain up to 12 million barrels of recoverable oil, if oil is present.
Jingemia No. 1 will drill the Jingemia Prospect, a tilted fault block prospect similar in structural style to the Hovea Oil Field discovery 5 kilometres to the northeast.
Jingemia No. 1 is planned to be drilled immediately following the drilling of Hovea No. 2, the appraisal well on the potentially significant Arc Energy NL Hovea Oil Field discovery, 5 kilometres to the north east of Jingemia No. 1.
Victoria Petroleum NL will have an effective free carried 5.7685% interest through the drilling of Jingemia NL.
Victoria Petroleum NL considers it has a prospective permit in the North Perth Basin, in an exciting reemergent area of exploration activity surrounded by the significant Cliff Head and Hovea oil discoveries and associated infrastructure.
Origin Energy is the Operator of EP 413.
WA-254-P
OFFSHORE CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - 9.31% (Part 2), 6.17% (Parts 1, 3 & 4)
The permit comprises four graticular blocks of 322 square kilometres in area on the Legendre Fault trend in the offshore Carnarvon Basin.
In April 1999 the Sage WA-254-P (Part 2) block provided Victoria Petroleum NL's first offshore oil discovery Sage-1, with the testing of 2,155 barrels of 48.8 degree API oil per day.
A review of the Sage Prospect by Operator Apache Energy concluded that the mean oil reserve was 3.8 million barrels of oil, which despite the current oil price is still below the economic threshold for a stand-alone development. An independent seismic interpretation and velocity model indicates that the Sage Prospect may have the potential to contain up to 26 million barrels of oil.
The potential also remains for a Sage Oil Field tie-in to any nearby development in adjacent permits, should a significant oil discovery be made in these adjacent permits.
The planned drilling in July 2002 of Nicol-1 by Apache Energy between parts 2 and 3 of WA-254-P, if successful, may provide an opportunity for the commercial development of the Sage Oil Field.
Additional prospects generated over the year include the Argos Prospect (potential for 11 million barrels of oil), the Cerebus Prospect (potential for 15 million barrels of oil), the Collier Prospect (potential for 10 million barrels of oil) and a number of additional leads that require additional work.
The Argos Prospect is particularly significant in that it lies immediately to the south of the producing 40 million barrel Legendre Oilfield, and its associated platform and production infrastructure. Drilling of Argos-1 is currently planned for late 2002/first quarter 2003.
Victoria Petroleum NL concludes that further exploration drilling will take place in WA-254-P within the next 12 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.
Apache Energy N.L. is the Operator of the WA-254-P Joint Venture.
WA-261-P
OFFSHORE CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - 6.1538%
WA-261-P covering an area of 299 square kilometres in the offshore Carnarvon Basin is located immediately to the south and adjacent to the Apache Energy/Santos Limited permit WA-209-P containing the 50 million barrel Stag Oilfield, currently producing approximately 15,000 barrels of oil per day.
Chamois-1 was drilled in September 2000, targeting the Jurassic Athol and Triassic Mungaroo formations that are becoming prolific producing horizons in the Carnarvon Basin. While the Mungaroo Formation was dry, the Athol Formation contained approximately 6 metres of net oil pay and the M. Australis sandstone contained about 3 metres of net gas pay.
At present this discovery is deemed sub-commercial, but the recovery of oil from the target Jurassic formation provides encouragement that further drilling on the Chamois Prospect may yet result in the discovery of a commercial pool of hydrocarbons in the permit.
Subsequent to the drilling of Chamois-1, Rhebok-1 tested a Stag Sand pinch out trap up dip and south of the Stag Oilfield. The target reservoir sand was found to be absent in drilling Rhebok No. 1 and no shows were evident in the underlying reservoir sands of the secondary objective Mungaroo Formation.
Since the September 2000 drilling program, the Operator has carried out a post mortem of the drilling results and an extensive review of the remaining prospectivity of the permit. This has been greatly assisted by the stratigraphic information from the wells drilled within and just outside the permit over the last 12 to 24 months.
From this study Rhebok-1 has been shown to be drilled outside the pinch out edge of the Stag Sand and the concept of a large Stag Sand pinch out trap, south of the 45 million barrel Stag Oilfield continues to remain a valid target. This target has been named the Ceres Prospect and lies to the west of Rhebok-1 and Springbok-1, east of Chamois-1 and southeast of Oryx-1.
Potential gross reserves for the Ceres Prospect (if hydrocarbons are assumed present in the trap) have been calculated as ranging from 14 million barrels of oil recoverable (truncated mean) to 23 million barrels of oil (P10). If the prospect is proved, the potential could be much greater (up to 80 million barrels of oil recoverable) because of the stratigraphic nature of the trap.
Ceres-1 is a shallow well test (approximately 750 metres in depth) and is planned to be drilled in August 2002.
The large Altostratus Prospect, a portion of which extends into WA-261-P from the adjacent permit to the south TP/17, will also be drilled in August 2002, following Ceres-1.
Apache Energy is the Operator of the WA-261-P Joint Venture.
WA-312-P
OFFSHORE CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - 33.3%
The company was recently granted a new exploration permit, designated WA-312-P, in the Dampier Sub-basin of the offshore Carnarvon Basin, Northwest Shelf, Western Australia.
Lying approximately 50km to the north of Karratha, the permit comprises 23 graticular blocks over 1850 square kilometres, and is situated less than 1 kilometre south of the 80 million barrels recoverable Wandoo Oil Field, currently producing 24,000 barrels of oil per day, the Hampton-1 gas discovery, and 11 kilometres to the east of the 50 million barrels recoverable Stag Oil Field, currently producing 15,000 barrels of oil per day.
The permit has had only three wells drilled in it and is considered lightly explored given the proximity to the prolific oil and gas fields to the north and west.
The Permit has been granted for a six-year term and the initial three years exploration will be taken up with a program of seismic re-processing and acquisition to mature a drilling target. The WA-312-P Joint Venture has already identified, among the nineteen leads and prospects mapped to date within the Permit, a number of prospects and leads at the Wandoo and Stag oil producing horizons (M.australis) that will be the focus of exploration attention.
The potential size of the target leads range from 10 to 100 million barrels of oil recoverable in an area of favourable infrastructure.
A 3D seismic survey has been carried out in the western portion of the permit during the quarter to define leads and prospects in this area as future drilling candidates for farmout.
Victoria Petroleum NL is the Operator of the WA-312-P Joint Venture.
EP 325
OFFSHORE CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - 60%
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 Discovery.
The Joint Venture is focussing on the potential for development of the existing and predicted natural gas resources of the Exmouth Gulf. As the Government of Western Australia proceeds with its policy of private electricity generation a market has developed for natural gas in the Cape Range Peninsular to which EP 325, the 9 billion cubic feet Rivoli-1 Gas Discovery and the potential 22 million barrels of oil or 49 billion cubic feet of gas Cooper Prospect are ideally located.
Engineering and economic studies are proceeding to determine the feasibility of development of the Rivoli/Cooper trend to supply natural gas to Exmouth and the region.
Recent geological and geophysical analysis provides confidence that the Cooper Prospect is most likely to be an oil target. Preparations for the drilling of Cooper-1 in late 2002 have commenced and potential farmin partners are now actively being sought to provide Victoria Petroleum with a 20% free carried interest through the drilling of Cooper-1.
Victoria Petroleum NL is the Operator of the EP 325 Joint Venture.
EP 359
CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST- 11.17%
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.
Victoria Petroleum has an agreement with Rough Range Oil Pty Ltd, a fully-owned subsidiary of Empire Oil NL, in which Rough Range Oil will carry out significant exploration activity in EP 359, including drilling of up to two wells, over the next two years.
The up to 25 million barrel Fiona and up to 15 million barrel Suzanna oil prospects are potential drilling targets in EP 359 for Rough Range Oil.
Rough Range Oil is the Operator of the nearby Rough Range-1B oil production facility, and will pursue similar oil prospects along the Rough Range trend into EP 359. The commencement of oil production at Rough Range has highlighted the viability of even small fields in this region to be economic, given the strength of Australian oil prices.
Empire Oil & Gas NL is the Operator of the EP 359 Joint Venture.
EP 41
CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - 88.7% (Part 1); 87% (Part 2)
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, now in commercial production as Rough Range-1B, lies within EP 41 Part 3, adjacent to EP 41 Part 2.
Victoria Petroleum has an agreement with Rough Range Oil Pty Ltd, a fully-owned subsidiary of Empire Oil NL, in which Rough Range Oil will carry out significant exploration activity in EP 41, including drilling of up to two wells, over the next two years.
Upon completion of the Farmin work program Victoria will retain a 10% interest in two prospects within EP 41 Part 3 and a 69.6% interest in Part 2. Part 1 will remain at 88.7%. Tess-1 was the first farmin well by Rough Range Oil, but the wells was abandoned with no significant shows.
Victoria Petroleum NL is the Operator of the EP 41 (Parts 1 & 2) Joint Venture.
QUEENSLAND
ATP 333P
BOWEN BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. 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 three wells drilled on the Reids Dome Gas Field prior to November 1994.
During the year Tri-Star Energy Drilled Nyanda-2 and Nyanda-3, encountering the anticipated gas sands. As the gas sands were tight, Tri-Star has suspended these wells and has withdrawn from the permit.
Victoria Petroleum has resumed as the Operator of the ATP 333P Joint Venture, and is planning to work up locations for the program with the drilling of two wells, following farmout, in the northern part of the Reids Dome in late May 2002.
ATP 465P
BOWEN BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. INTEREST: CBM - 5% (PLA 171); 8% (ATP 465P) - REMAINDER - 4%
ATP 465P (including PLA 171) covers an area of 539 square kilometres within the central portion of the Bowen and Surat basins in Queensland.
Queensland Gas Company Limited (QGC), has drilled two Coalbed Methane (CBM) wells and one core hole in the Walloon Coal Measures of the Cherwondah Anticline, with the drilling of Trafalgar-1, Lawton-1 and the core hole Lawton-2.
Trafalgar No. 1 intersected 19.6 metres of coal within the four upper seams of the Walloon Coal Measures. Testing of the well during drilling produced gas at a rate of 20,000 cubic feet per day (570 cubic metres per day) and water production measured at 360 barrels per day. These results are typical of the initial flows from wells drilled in the Powder River Basin in the USA.
Lawton-1 had similar results, in which a flow test of interval 129-378m produced gas at rates up to 19,400 cubic feet / day.
Evaluation of the remaining untested CBM potential of ATP 465P is planned for the second quarter of 2002.
Victoria Petroleum NL has a 5-8% contributing interest in the QGC drilling program.
QGC's independent expert report of July 2000 states that the Walloon Coal Measures of ATP 465P have the potential to contain 500 billion cubic feet of recoverable Coalbed Methane gas reserves. CBM drilling and testing results to data support this initial estimate.
Interest in methane gas produced from coal deposits is increasing in Australia, particularly in the Bowen Basin. ATP 465P is adjacent to the Peat Coalbed Methane field which is now producing sales gas into the pipeline linking it to Brisbane markets.
Continuing development of the 200 billion cubic feet of gas potential in the Triassic Clematis Formation of ATP 465P is underway with a letter of agreement signed with a private company for the re-entry of North Cherwondah-1 and fracture stimulation in late 2002. Victoria Petroleum NL will have a 4% carried interest through this program and a second optional well to test the deeper 200 BCF ptoentail in the Permian Gyranda Formation.
Roma Petroleum NL is the Operator of the ATP 465P Joint Venture.
ATP 471P
WERIBONE BLOCK, SURAT BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. 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 Gas Field in adjacent licences to the north.
Due to recent ownership changes in the Joint Venture, the testing of Yarrabend-5 has been postponed.
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 in the Weribone Block.
ATP 574P
BOWEN BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. INTEREST - 18.75% (Walloon Coals); 75% (Remainder)
ATP 574P covers an area of 616 square kilometres within the central and southern portions of the Bowen and Surat Basins in Queensland.
Queensland Gas Company Limited (QGC) drilled two Coal Bed Methane (CBM) farmin wells, Pinelands-1 and 3, which flowed gas at up to 10,600 cubic feet of gas per day, and the Pinelands-2 core hole to further evaluate the coal absorption properties of the target Walloon Coal Measures.
The Pinelands-3 CBM well is planned to be fracced and dewatered in the second quarter 2002.
Victoria Petroleum NL will have a 18.75% interest in the QGC CBM drilling program.
QGC's independent experts report of July 2000 states that the Walloon Coal Measures of ATP 574P have the potential to contain 650 billion cubic feet of recoverable coal bed methane gas reserves.
CBM drilling and testing results to date appear to support his initial estimate.
Victoria Petroleum NL retains its 75% interest in the deeper Jurassic and Triassic hydrocarbon potential of the permit as a review of existing well data shows that there may be by-passed oil in an old abandoned well in the permit, Giligulgul-1.
This evaluation has resulted in the definition of the North Giligulgul Prospect, interpreted from seismic, well and drill stem test data to have the potential to contain updip oil potential of up to 23 million barrels, if oil is present.
A 15km seismic survey was carried out in February 2002 to further define the drilling location for North Giligulgul-1. Drilling of North Giligulgul-1 is planned for the third quarter 2002, subject to farmout.
Significant Permian gas potential of up to 200 billion cubic feet of recoverable gas is considered present in the Juandah area of the permit. This potential drilling target is currently being evaluated.
Victoria Petroleum NL is the Operator of the ATP 574P Joint Venture, with the Walloon Coal Measures CBM drilling program being managed by Queensland Gas Company Limited.
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.
Evaluation of the future exploration potential of the 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.
Further evaluation of the prospects and leads in the Ueleven Block is planned by the Operator for the Ueleven Block, Lakes Oil N.L.
ATP 589P
COOPER / EROMANGA BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. INTERESTS: - 60% (Barcoo Block);
24% (Springfield and Regeleigh Block);
15% (Bright Spot Block)
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.
Significant Jurassic oil potential has 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 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.
Exploration will resume in ATP 589P following the completion of Native Title negotiations currently in progress.
Victoria Petroleum NL is the Operator for the Barcoo Block of ATP 589P, Part 1 and ATP 589P, Part 2.
ATP 593P
SURAT / BOWEN BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. 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.
Victoria Petroleum NL is the Operator of the ATP 593P Joint Venture.
ATP 608P
SURAT BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. INTEREST, 74.22% (Rookwood Block); 60% (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 maybe present, indicating a potential target of up to 12 million barrels in the Rookwood Prospect, if oil is present. A redrill of the Rookwood Prospect, Rookwood South-1, is planned for the second half of 2002, subject to farmout.
Victoria Petroleum NL is the Operator of the ATP 608P Joint Venture.
SOUTH AUSTRALIA
PEL 57
OTWAY BASIN, SOUTH AUSTRALIA
VICTORIA PETROLEUM N.L. 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.
Exploration has now focussed on the north western portion of the area with the planned Honans Scrub seismic program of 60 kilometres over the Orana Prospect to be carried out in the second quarter of 2002.
Origin Energy is the operator of the PEL 57 Joint Venture and the adjacent Katnook/Hazelgrove producing gas fields.
PRA 436 (RENEWAL APPLICATION)
NEW CALEDONIA BASIN, NEW CALEDONIA
VICTORIA PETROLEUM N.L. INTEREST - 33%
The Participants in the PRA 436 exploration effort are currently studying the potential for a second well on the Gouaro Prospect in conjunction with a renewal application over the area.
The first well, Cadart-1, was drilled to a total depth of 1930 metres in January 2000. An open-hole test of the interval 1650-1930 metres produced gas to surface at a rate too small to measure. After a 36-hour flow test, the well bridged off and the gas flow died. Subsequent attempts to sidetrack the well and re-drill the prospective section were unsuccessful and the well was abandoned on 17th February 2000.
A ready market for gas to electricity from 6 million cubic feet per day up to 50 million cubic feet per day potentially increasing to 100 million cubic feet per day in 2003, at 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 extremely strong market demand for any locally discovered and produced hydrocarbons to replace the 2 million barrels of diesel and fuel oil imported each year to generate electricity for New Caledonia and the encouraging oil and gas shows and gas flow to surface from the Cadart-1 drilling.
Victoria Petroleum NL is the Operator of the PRA 436 Joint Venture.
PPL 228
PAPUAN BASIN, PAPUA NEW GUINEA
VICTORIA PETROLEUM N.L. INTEREST - 15%
Petroleum Prospecting Licence PPL 228 was issued in September 2001 as a result of the top-file over the more prospective portions of PPL 202 and 213. PPL 228, formerly PPL 202 and PPL 213, lies in the mid western extremities of Papua New Guinea. The OK Tedi copper mine and the river port of Tabubil, laying within the western portion of the licence area, are the major and only infrastructure centres in this part of the country.
The Joint Venture considers the area of PPL 228 as being cursorily explored in both the highland and foreland areas of the Fold Belt. The Tarim 1 well, drilled in the highlands of the Fold Belt in the northeastern portion of the licence in 1990, tested gas and trace condensate from the Toro and Digumu Sandstones over the interval 3,378 metres to 3,499 metres, but good oil shows within sandstones of the Alene Member of the Toro Sandstone remained untested due to mechanical problems in the well. Similarly, good oil shows were encountered in the Alene Member in the Menga Anticline drilled by Menga No. 1 in 1995. As a generalisation the major folds and stratigraphy that contain substantial producing hydrocarbon fields such as Hides, Moran, Iagifu, Hedina and Gobe trend into this portion of the permit from the southeast.
The prospectivity of the foreland portion of the Fold Belt is promoted by the untested 7.8 metre net gas/condensate discovery in the Toro Sandstone in a compartment of the overlapping Stanley Prospect in PPL 157, and similar encouragement from the large Elevala 1 trillion cubic feet and 60 million barrels gas/condensate discovery and its yet explored down dip oil-leg potential in the same south bounding permit
A complete review of the prospect and lead inventory on the permit, inclusive of extensive geological studies and financial modelling, has been carried out by the Operator, Barracuda. High graded prospects and leads have resulted with the delineation of the Amdi (775 million barrels), Tarim (300 million barrels, Muir (171 million barrel), Champion (390 million barrels) prospects.. These are located where infrastructure is good and geological and structural risk is reduced; ie target depth is shallow and hydrocarbons are known to be present from the previous drilling of Tarim No. 1 and Menga No. 1.
In the next few months the joint venture will commence a field program of geotraversing and seismic to confirm the Amdi Anticline (up to 755 million barrels of oil potential) as a drill target for 2003. Amdi lies between the previously drilled Menga structure that had good oil shows in the Alene reservoir, but structure had been breached, and the large 2.5 trillion cubic feet and 35 million barrel Pynang Gas/Condensate Field. It is thought that late gas charge displaced the majority of what must have been a substantial oil reservoir from the Pynang structure, to migrate oil northwest into the Amdi and Tarim Prospects.
Santos Ltd is the Operator of the PPL 228 Joint Venture.
Yours faithfully,
JOHN KOPCHEFF
MANAGING DIRECTOR
VICTORIA PETROLEUM N.L.
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