- Commencement of drilling in late June 2006 by White Sands Petroleum of 2700 metre
exploration well on Reids Dome in central Queensland targeting up to 309 billion cubic
feet of gas potential, if gas is present. Victoria Petroleum has a 40% free carried
interest through the drilling, testing and completion of the well.
- Initial shallow gas exploration success at Reids Dome with Primero-1 testing gas flow
of 2.8 million cubic feet per day. Drilling of deeper targets to 2700 metres is continuing.
- Commencement in late August 2006 of ten well exploration drilling program in five
Queensland and South Australian Cooper Basin permits through 2006.
- In south west Queensland Cooper Basin permits, five wells to be drilled with first
exploration well in late August Banff-1 testing a target with up to 34 million barrel oil
potential, with further four wells to follow in 2006 testing cumulative up to 18 million
barrel oil potential, if oil is present.
- In the South Australian Cooper Basin permits, five wells are to be drilled in second half
2006 with Growler-1 to commence in September 2006 targeting up to 16 million
barrels, if oil is present. Of the other four exploration wells, Tomcat-1 is planned to test
a target with up to 6 million barrel oil potential, if oil is present, up dip to well with “oil
show” of 780 barrels of oil per day.
- Exploration drilling in the Greater Mirage - Lightning area of PEL115 with the Jindvik-1
and Lightning-1 well indicates the presence of a large Murta oil pool with up to 23
million barrels of oil in place. The commerciality of the oil pool outside of the producing
Mirage and Ventura oil fields is being investigated with fracture stimulation studies.
- Production testing of Eagle North-1 appraisal well in California to continue in August
2006 to test 177 metres of horizontal lower Mary Bellocchi oil sand. Eagle North-1 is
appraising the Eagle Oil Pool with potential to contain up to 34 million barrels of oil and
58 billion cubic feet of gas. Victoria Petroleum has a 20% interest on success in Eagle
North-1 drilling and completion for production.
- Commencement of drilling in September 2006 by White Sands Petroleum of horizontal
appraisal well in gas bearing Triassic sands of the North Cherwondah well, central
Queensland, targeting up to 125 billion cubic feet of gas. Victoria Petroleum has an
8% free carried interest through the drilling and completion of the well.
- Two gas exploration wells based on 3D seismic data are planned for the third quarter in
Texas Margarita onshore Gulf Coast.
- Fifteen exploration and appraisal wells planned over the next four months with a target
potential in excess of 50 million barrels of oil and up to 156 billion cubic feet of gas, if
oil and gas is present, as per the attached drilling schedule.
Development and Production Activity
- Total gross production over the quarter was 254,680 barrels of oil equivalent with net
24,488 barrels of oil equivalent to Victoria Petroleum at an average production rate of
269 barrels of oil equivalent per day.
- High oil prices during the quarter provided estimated oil and gas sales net cash flow of
$2.1 million.
- Successful completion of 3 development wells on Mirage Oil Field, South Australia
Cooper Basin during the quarter. Aim to increase total Mirage Oil Field oil production
up to estimated gross 1000 barrels of oil per day by end 2006, following August 2006
fracture stimulation of Mirage-2 and Mirage-3 wells.
A successful fracture stimulation with increased oil production could result in the
fracture stimulation of other wells in the Mirage-Ventura-Lightning Murta oil field.
- Drilling in August 2006 of Jingemia-8 development well in North Perth Basin to offset
natural decline and return Jingemia field production to 5000 barrels of oil per day in
third quarter 2006.
- Planned development drilling program on Flour Bluff Gas Field, Texas in fourth quarter
2006 with aim to increase gas production within 12 months up to 10 million cubic feet
per day.
- It is anticipated that by the end of calendar 2006 that with successful development
drilling, the current and planned future Victoria Petroleum net oil and gas production
will generate net cash flow estimated at $8 million for the year (calculated at US$65/
bbl and US$8/mcf), a 180% increase over calendar 2004 net cash flow from oil and gas
sales of $4.4 million.
- Victoria Petroleum development and production activities in Australia and USA are
being carried out against a background of historical high oil prices in the range of A$65-
A$75 per barrel.
Other Assets
- Victoria Petroleum N.L. has a 5.3% interest in Samson Oil & Gas Limited which
through its 93.4% shareholding in Kestrel Energy, Inc. has recoverable proved
reserves attributable to Samson of 23.5 billion cubic feet of gas equivalent with a 10%
net present value of A$90.4 million as reported by Samson Oil & Gas Limited.
- Cash and current investments as at June 30, 2006 of $7.8 million to fund planned
exploration and development drilling activities, as follows:
| Cash at bank and on deposit : | $2,928,921 |
| Current investments in listed companies valued at market : | $4,951,207 |
| Total : | $7,880,128 |
Index
Highlights | Exploration
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