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NEW CALEDONIA
AUSTRALIA
PAPUA NEW GUINEA
USA
MIDDLE EAST
KESTREL ENERGY, INC.
PRA 436; New Caledonia
Victoria Petroleum N.L. Interest - 50%
Victoria Petroleum N.L., by paying 50% of the October 1995, 49 kilometre seismic program over the Gouaro Anticline, has the option to earn a 50% interest in PRA 436 by paying 50% of the cost of drilling a well in the fourth quarter of 1998.
The Gouaro Anticline is a surface anticline estimated from seismic interpretation of the 1995 Gouaro seismic data to have the most likely case potential to contain 592 billion cubic feet of gas or 295 million barrels of oil up to a maximum of 1.5 TCF or 1 billion barrels of oil, if hydrocarbons are present.
Cadart-1 is planned to be drilled to a depth of 1500 metres in September 1999, subject to farmout.
A major ready market for gas of from 6 million cubic feet per day up to 100 million cubic feet per day at very attractive gas prices is available in the adjacent industrial and Nickel refining operations in New Caledonia.
Victoria Petroleum NL anticipates in the event of a successful farmout it will have an effective free carried interest of 16.5% through the drilling of Gouaro-1.
Victoria Petroleum N.L. has a 7.1% direct and indirect interest in the Part 2 Sage Block and a direct and indirect 4.6 % 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.
Exploration during the last quarter has focused on the seismic definition from 3D seismic data of the Sage and Argos Prospects, the Taurus, Sirius and Erebus leads and the drilling of the Sage Prospect.
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 Sage Prospect was interpreted as a potential updip oil accumulation to the 9 metre interpreted residual oil column in Rosemary-1 and was interpreted to have the potential to contain up to 33 million barrels of oil in target Cretaceous and Jurassic sands, if hydrocarbons are present. The Sage Prospect commenced drilling on March 15, 1999 and encountered an interpreted 45 metre gross oil column with a cumulative 28.5 metres of net oil pay contained within the following three intervals.
"Saffron Sandstone" (Intra-Muderong sand)
17 metres of net oil pay over the gross hydrocarbon bearing metre interval from 1910m - 1934m. The pressure gradient is indicative of an oil water contact at 1943.5 metres, resulting in an interpreted 33.5 metre oil column. A formation sample taken at 1933m recovered 6 litres of light 50 degree API oil (at 28oC), 7 cubic feet of gas and 1.6 litres of mud filtrate.
"P Burgeri Sand" (Intra-Muderong sand)
5 metres of net oil pay over the interval 1994 - 1999m. A formation sample taken at 1995.3m recovered 3.7 litres of 49 degree API oil (at 24oC), 4.3 cubic feet of gas and 2.6 litres of mud filtrate.
Angel Sandstone Formation
6.5 metres of net oil pay over the interval 2199 - 2205.5m
A formation sample taken at 2203m recovered 3 litres of 48 degree API oil (at 25oC).
The 48-50 degree API quality of the Sage oil indicates that the Sage oil is not biodegraded.
Flow Testing Results:
On Sunday 4th April 1999, the Saffron Sandstone interval from 1909-1934 metres was perforated and flow tested. An oil flow on a ½" choke at an average oil rate of 2155 stock tank barrels of 48.8 degree API oil per day with associated gas of 424,000 standard cubic feet of gas per day with a flowing well head pressure of 522 psia was recorded.
The well was also flow tested at a reduced 3/8" choke size and flow tested at an average oil rate of 1180 stock tank barrels of oil per day with associated gas of 328,000 standard cubic feet per day with a flowing well head pressure of 598 psia.
Throughout the respective flow periods, the well consistently produced a light, clean, reddish brown crude oil without water or emulsion.
Flow tests at larger choke sizes than ½" to determine the maximum flow rate for the Saffron Sandstone interval were prevented from being carried out due to the safety needs to cease operations and secure the rig ahead of the advancing tropical cyclone "Gwenda". Higher flow rates greater than 2155 barrels of oil per day were anticipated, but cannot be confirmed as flow testing operations on the Sage-1 well have now been regrettably prematurely terminated by natural events beyond the control of Victoria Petroleum N.L..
Flow testing of the P. Burgeri Sand and Angel Formation hydrocarbon zones intersected in Sage-1 were not programmed in this series of flow tests, but oil flows from these two zones could be reasonably expected to occur based on the observed wireline Sample Formation Taker oil recoveries, formation pressures and indicated good reservoir permeabilities.
Victoria Petroleum N.L. considers the flow test results achieved to date from the Saffron Sandstone to be a significant step in determining the commerciality of the Sage Oil Field discovery.
An indication of the commercial nature of the Sage Oil Field discovery will be provided by the analysis of the Sage-1 drilling and testing results and seismic remapping in time and depth of the Sage Oil Field discovery, but will need to be confirmed by subsequent appraisal drilling as and when proposed by the operator, Apache Northwest.
A preliminary independent post well seismic data and well review of the Sage-1 results indicates a possible Saffron Sandstone oil reserve potential of up to 27 million barrels, if oil is present, subject to further development drilling.
The Sage Oil Field discovery lies 24 kilometres north of the Wandoo Oil Field production facilities, a potential tie in point of export for Sage Oil Field crude, following the determination of a commercial discovery for the Sage Oil Field discovery.
The drilling success at Sage-1, further confirms the hydrocarbon prospectivity of the Saffron-Legendre Oil and Gas Field trend and provides encouragement for further possible exploration success in the drilling of Victoria Petroleum's next prospect in WA-254-P on this trend, the Argos Prospect.
Within WA-254-P Part 3 the Argos Prospect, on trend and 4 kilometres southwest of the Legendre Oil Field, has been interpreted from recently acquired 3D seismic as a prospect mature for drilling
The Argos Prospect is interpreted from the 3D seismic data to have the potential to contain up to 17 million barrels of oil in target Cretaceous sands, if hydrocarbons are present. The Argos Prospect is planned to be drilled in October, 1999, subject to ongoing technical review.
Encouragement for the future gas and oil exploration potential of WA-254-P is provided by the recent Reindeer and Caribou Gas Field discovery, estimated to contain 400 billion cubic feet of gas. The Reindeer Gas Field discovery, 7 kilometres to the east of WA-254-P, Part 1, has identified a new Lower Jurassic and Triassic gas play which may be present in WA-254-P. The commercialisation of the Legendre Oil Field following its extension with the recent Legendre South-1 oil discovery provides an opportunity for the commercial development of any Sage or Argos oil discovery made of sufficient reserve size, with production a possibility as early as 2000/2001.
WA-261-P - Offshore Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest - 3.16% (Direct and Indirect)
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.
Further seismic analysis is planned for 1999 to define a possible drill location for Rehbok-1 with possible drilling in the last quarter of 1999.
Apache Energy is the Operator of the WA-261-P Joint Venture.
EP 325 - Offshore Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest (Direct And Indirect) - 10.5%
Victoria Petroleum N.L. has a 10.5% direct and indirect interest in the predominantly offshore Carnarvon Basin Permit EP 325, following farmout to Petroz N.L.. EP 325 covers an area of 2,461 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 is 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 are present. An onshore drilling location for the Triassic White Opal Prospect has been defined, with the drilling of White Opal-1 to a depth of 2,900 metres planned for the first quarter of 2000, subject to government approvals.
The 1 trillion cubic feet Macedon Gas Field, 22 kilometres to the north, the 20 billion cubic feet Rivoli Gas Field, 18 kilometres to the south and the Leatherback Triassic oil discovery, 22 kilometres to the north-east respectively of the White Opal Prospect are encouraging for the presence of further Triassic gas and oil fields in the area.
The company, through a farmout to Petroz N.L., will have a 10.5% direct and indirect near free-carried interest through the drilling of White Opal-1 through its direct 10% interest and its shareholding in Kestrel Energy, Inc
EP 359 - Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest (Direct And Indirect) - 20.1%
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.
Melanie-1 was drilled to a total depth of 1422 metres in July 1998, with a minor gas show observed in the target Birdrong Sandstone. A strong gas show was observed in an underlying thin Jurassic limestone stringer. The gas shows in Melanie-1 are encouraging for the future gas prospectivity of this area of EP 359. Evaluation of the future exploration potential of EP 359 will continue to determine future possible drilling locations in EP 359.
EP 41, Parts 1 and 2 - Carnarvon Basin, W.A.
Victoria Petroleum N.L. Interest - 90%
EP 41 covers an area of 794 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 the data is planned to determine future possible drilling locations in EP 41, Parts 1 and 2.
Victoria Petroleum N.L. is the Operator of the EP 41 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 second half of 1999, subject to farmout.
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.
ATP 465P - Bowen Basin, Queensland
Victoria Petroleum N.L. Interest - 20%
Future exploration in ATP 465 will focus on 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 Clematis sandstones and the coal-bed methane potential of the north-eastern area of the permit adjacent to the adjoining CRA Peat Gas Field.
ATP 471 P - Weribone Block - Surat Basin, QLD
Victoria Petroleum Interest - 20.65%
The Yarrabend No.5 gas well remains suspended with the Joint Venture considering a completion and testing program in the near future.
ATP 560P, Eromanga Basin, QLD
Victoria Petroleum Interest (Direct and Indirect) - McIver Block - 46.3%
McIver-1 was drilled in May 1996 to a total depth of 1405 metres to test the McIver Prospect situated on the Canaway Ridge. Excellent reservoirs were drilled in the target Hutton and Basal Jurassic Sandstones, but hydrocarbons were not encountered. Further evaluation of the remaining prospects and leads in the McIver Block is planned.
Victoria Petroleum N.L. is the Operator for the McIver Block.
ATP 560P, Eromanga Basin, QLD
Victoria Petroleum Interest - Ueleven Block - 17 %
Ueleven-1 was drilled in November 1997 to a total depth of 1189 metres. Excellent reservoirs were drilled in the target Hutton sandstone but hydrocarbons were not encountered. Further evaluation of the remaining prospects and leads in the Ueleven Block is planned.
Lakes Oil N.L. is to Operator for the Ueleven Block.
ATP 574P - Bowen Basin, QLD
Victoria Petroleum Interest - 75%
The permit contains the shut in Conloi Oil Field. Significant deeper oil and gas potential is considered present in the deeper Triassic and Permian Sands of the permit as well as the shallower Jurassic Precipice sands. An evaluation of the Jurassic Precipice oil shows seen in previous drilling in the permit 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, as yet undefined, if oil is present.
Following further seismic reprocessing, the possible drilling of North Gilligulgul-1 is planned for the third quarter of 1999, subject to farmout and technical review.
ATP 589P - Cooper/Eromanga Basin, QLD
Victoria Petroleum Interest (Direct and Indirect) - varying 12-60%
The ATP 589P 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 OCA 4 million cubic feet per day Thylungra-1 gas and condensate discovery.
In late 1997, under the Icon Oil N.L. ATP 589P Farmin, Icon Oil drilled Springfield East-1, Regleigh North-1 and Brightspot-1. The drilling resulted in a non commercial gas discovery at Springfield East-1 which flowed gas at a rate 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 Permian gas potential of this area of ATP 589P.
Significant Jurassic oil potential has also been interpreted as present in ATP 589P in the Barcoo Junction area, based on the oil shows seen in the numerous wells drilled in the permit.
Barcoo Junction-2 was drilled in June 1996 to a total depth of 2620 metres to test the Barcoo Junction Prospect in the north-western area of ATP 589(1). Barcoo Junction-2 was prognosed prior to drilling as an updip test of the oil and gas shows observed in the Hutton and Basal Jurassic sands in Barcoo Junction-1, drilled in 1980.
Barcoo Junction-2 encountered good oil shows in the target Hutton and Basal Jurassic sandstones.
Further geological and geophysical evaluation of the well results of Barcoo Junction-2 to determine the significance of the oil strong shows encountered in the Hutton and Basal Jurassic sandstones, indicates Barcoo Junction-1 and Barcoo Junction-2 were drilled out of depth closure. The Barcoo Junction North Prospect has been interpreted to be updip of Barcoo Junction-1 with the potential to contain up to 36 million barrels of oil in the target Hutton and Basal Jurassic sandstones, if oil is present.
Subject to farmout, Barcoo Junction North-1 is planned to be drilled in the first quarter of 2000.
The Moothandella-4 Westbourne Prospect has been seismically identified to have the potential to contain up to 23 million barrels of oil in interpreted Westbourne channel sands, if the sands and oil are present.
The Trinidad North Prospect situated on the northern portion of the Canaway Ridge, has been seismically interpreted to have the potential to contain up to 19 million barrels of oil in target Hutton and Basal Jurassic sandstones in an anticlinal structure, if oil is present.
Several other prospects and leads have also been identified in ATP 589P (1) including the Sedan Prospect to the north of Brightspot-1.
The continuing Jurassic oil and Permian gas discoveries in this area of the Cooper / Eromanga Basin confirm the strategic exploration value of the acreage position that Victoria Petroleum N.L. holds area of the Cooper / Eromanga Basin.
Victoria Petroleum NL is the Operator for the Barcoo Block of ATP 589P.
ATP 593P - Surat Basin, QLD
Victoria Petroleum Interest - 60%
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 potential reserves calculated at 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 in Don Juan-1 and in Flaneur-1, 25 kilometres to the north.
Heather Downs-1was drilled in July 1997 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 first 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
Victoria Petroleum N.L. was granted this permit and Operatorship on 30 November, 1994 and prior to farmout held a 60% interest in the whole permit. The permit is located on 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 may be present, indicating a potential target of up to 6.3 million barrels in the Rookwood Prospect, if oil is present.
A redrill of the Rookwood Prospect is planned for the first quarter of 2000 subject to farmout.
EPP 24 - Otway Basin, SA
Victoria Petroleum Interest - 6.67%
EPP 24 contains the 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, and has been interpreted by the Operator, Boral Energy. Future exploration will focus on a data review of the permit and a possible 3D Seismic Survey over the Troas Gas discovery.
Victoria Petroleum N.L. considers the offshore Otway Basin to have all the parameters to be a future major oil and gas province.
PEL 57 - Otway Basin, SA
Victoria Petroleum Interest - 10%
Interpretation of the 16 kilometre Mulcrest Seismic Survey, carried out in the first quarter of 1998 indicates the Mulcrest Prospect may have a potential target size of up to 120 BCF of gas. The McIntyre seismic survey was carried out in March 1999 over the Mulcrest Prospect. Interpretation of this data is currently in progress to determine a possible late 1999 / early 2000 drilling location on the Mulcrest 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.
PPL 213 - Papuan Basin, Papua New Guinea
Victoria Petroleum Interest (Direct and Indirect, after farmout) - 5.46%
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 (Direct and Indirect) - 11.3%
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 Toto 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.
San Joaquin Basin, California, USA
Victoria Petroleum N.L. Interest (Direct and Indirect) - 63.3%
Victoria Petroleum N.L. and Kestrel Energy, Inc. through their respective U.S. subsidiaries each have a 50% interest in the petroleum exploration assets of the San Joaquin Basin Project (SJBP) area, located in the central San Joaquin Basin, California, USA.
Victoria Petroleum N.L. holds a 26.5% interest in Kestrel Energy, Inc. a U.S. Nasdaq listed company.
The petroleum exploration assets in the SJBP area, consists of petroleum leasehold exploration properties in the San Joaquin Basin 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 is now focused 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 drilled in the past twelve months.
As part of this new exploration focus, the Kingfisher and Raven Prospects have been geologically and geophysically defined to the drilling stage as attractive gas exploration targets.
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 gas and oil reserves up to a maximum of 75 billion cubic feet of gas and 10 million barrels of oil, if gas and oil are present.
The Raven Prospect is a seismically defined upthrown fault block prospect which is considered to have the potential to contain gas and oil reserves up to a maximum of 111 billion cubic feet of gas and 2 million barrels of oil, if gas and oil are present.
The cumulative maximum gas and oil target potential of the Kingfisher and Raven Prospects is 186 BCF of gas and 12 million barrel of oil, if gas and oil are present.
Drilling of the Kingfisher Prospect is planned to commence October 1999 with the Raven Prospect in November 1999, subject to farmout. In the event of a successful farmout, Victoria Petroleum N.L. plans to have a 10% to 20% free-carried working interest in each of these prospects.
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 11 billion barrels of oil and 10 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 twelve prospects and leads with a possible target size of up to 200 million barrels of oil and 100 billion cubic feet of gas, if hydrocarbons are present.
As the SJBP partners increase their 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.
Victoria Petroleum N.L. has actively pursued during the quarter the evaluation of petroleum exploration and development opportunities in the Middle East to add to Victoria Petroleum N.L.'s international exploration profile. This activity is at an advanced stage, with the aim of Victoria Petroleum N.L. to secure areas in the near future which will be candidates for future farmout drilling activity.
Victoria Petroleum N.L., through its wholly owned subsidiary Victoria International Petroleum N.L. holds 26.5% of the Common Stock of 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 June 30, 1999, total Kestrel and Victoria Exploration Inc. oil and gas production for the quarter was 16,386 barrels of oil-equivalent for an average estimated daily production of 182 barrels of oil equivalent per day.
Yours faithfully,
JOHN KOPCHEFF
MANAGING DIRECTOR
VICTORIA PETROLEUM N.L.
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