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USA
AUSTRALIA
NEW CALEDONIA
PAPUA NEW GUINEA
KESTREL ENERGY, INC.
CALIFORNIA
SAN JOAQUIN BASIN
VICTORIA PETROLEUM N.L. INTEREST - 100%
In April 2000, Victoria Petroleum NL acquired the remaining 50% interest in the San Joaquin Basin Project held by Kestrel Energy, Inc. This rationalisation gave Victoria Petroleum 100% ownership and management of the exploration effort.
The petroleum exploration assets in the SJBP area consist of petroleum leasehold exploration properties approximately totalling 73 square kilometres, and a data base including approximately 25,000 kilometres of seismic and well data for 3,800 wells over the SJBP area of 21,000 square kilometres.
The Bellevue-No.1 gas discovery and blowout in 1998 led to a resurgence of interest in deep-gas drilling in the San Joaquin Basin. The Bellevue No.1 well which blew out at 5,380 metres (17,646 feet) at an estimated rate of 100 million cubic feet per day provides encouragement that the deep East Lost Hills Prospect trend has the potential to contain gas reserves in the order of 3-12 trillion cubic feet of gas. Since then two additional wells have been drilled on the East Lost Hills Prospect, and two more are planned.
The Pipeline Prospect is situated 8 kilometres to the east of the Bellevue-1 gas discovery well which blew out November 23rd, 1998 at a depth of 5380 metres (17,646 feet) at an estimated rate of 100 million cubic feet of gas and 3,000 barrels of oil per day.
The Pipeline Prospect, part of the Tri-Valley Corporation giant 9 trillion cubic foot of gas and 4 billion barrels of oil in place, EKHO Prospect, has as its target the same sands which blew out at Bellevue No. 1.
Victoria Petroleum has a 16% net interest in the Pipeline Prospect which is currently being evaluated at no cost to Victoria Petroleum NL by the adjacent well EKHO-1 drilled by Tri-Valley Corporation. EKHO-1, drilled this year to a depth of 5819 metres (19,085 feet), is currently production testing the target sands in the interval from 5488 to 5819 metres (18,000 feet to 19,085 feet). Tri-Valley Corporation the operator for the EKHO-1 well is confident that production testing of the oil and gas bearing sands in the target zone will eventually be successful.
EKHO-1 is offsetting the 1973 Great Basins 33X-10 well, 0.3 kilometres to the west, which flowed oil and gas at the rate of 900 barrels per day and 3.5 million cubic feet of gas. Victoria Petroleum NL considers the major risk with the Pipeline/EKHO Prospects is not the presence of the Victoria Petroleum 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 resources in the ground.
Recent positive encouragement of the ability of modern engineering techniques to do this was provided by the July 6, 2000 announcement by the Bellevue Trend operators, Berkley Petroleum, that the Berkley East Lost Hills No. 1 well on the Bellevue trend had been successfully completed for commercial production and tested at production rates of up to 23 million cubic feet of gas and 1,700 barrels of oil per day.
The Ekho-1 well is being prepared for additional fracture stimulation and testing to determine the productivity of the deep gas sands encountered. This testing will be of great significance to Victoria Petroleum, as our Pipeline Prospect lies within the Ekho Prospect. 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.
Victoria Petroleum 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 and provide Victoria Petroleum with a free carried interest in the well.
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.
While activity continues on the deep-gas play, Victoria has prepared for immediate drilling a number of other prospects within the San Joaquin Basin Project area with the planned drilling of up to six wells planned to take place in the period late November 2000 through into the first half of 2001.
Additional to the Pipeline Prospect, the Kingfisher and Raven Prospects have been prepared for immediate drilling. Since assuming 100% control and management of the SJBP, additional mapping has revealed the Hawk and Eagle Prospects that are also now on the drilling schedule.
Victoria Petroleum has defined the Kingfisher Prospect as an estimated 25 million barrel oil and 40 billion cubic foot gas target and the Raven Prospect as a 25 million barrel and 44 billion cubic foot gas target, if hydrocarbons are present. The Kingfisher and Raven Prospects are scheduled for drilling in late November through December 2000.
Victoria Petroleum NL has received strong industry farmin interest in the drilling of Kingfisher and Raven which should result in Victoria having a near free carried 25% interest through the drilling of these two wells to depths of 3,350-3,500 metres (11,000-11,500 feet).
From Victoria Petroleum's extensive seismic data base of approximately 25,000 kilometres the Eagle and Hawk Prospects have been defined as drillable targets with the potential to cumulatively contain up to 349 million barrels of oil and 635 billion cubic feet of gas.
The Eagle Prospect is seismically interpreted to have the potential to contain up to 40 million barrels of oil and 88 billion cubic feet of gas, if oil and gas are present. The Eagle Prospect is considered to be relatively low risk as a well drilled in the mid 80's on the southern edge of the Eagle Prospect flowed oil and gas at a cumulative rate of up to 325 barrels of oil and one million cubic feet of gas per day. The well planned for the Eagle Prospect will be offsetting this initial discovery well.
The Hawk Prospect on trend with the Eagle Prospect is interpreted seismically to have the potential to contain up to 309 million barrels of oil and 547 billion cubic feet of gas in three target horizons and has two associated wells with strong oil shows and an oil recovery of up to 406 barrels of oil per day.
The Hawk and Eagle wells are planned to commence drilling in January 2001 on a back to back basis following leasing and farmout.
Strong industry interest has been expressed in farming into these relatively low risk prospects for oil and gas, the risk determination based on the presence of several wells with oil shows and oil and gas recoveries adjacent to and on the edge of the prospects. Victoria Petroleum NL plans to have a 25% near free carried interest in each of these prospects.
It should be noted that the exact sequence of drilling of these prospects may vary and is dependent on lease positions, farminee interest and drill rig availability.
With the current high price of oil at around US$30 a barrel ($A56) and the very high price of gas in the San Joaquin Basin of up to US$5.20 per thousand cubic feet (A$9.75 per thousand cubic feet), the commercial success of any sustained oil and gas flows discovered in any of the wells in the above San Joaquin Basin drilling program is most likely. Several other prospects are currently in the process of being prepared for drilling in the first half of 2001.
The planned 2000-2001 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 for the last 3 years.
The prolific oil and gas nature of the San Joaquin Basin with proved reserves of 11 billion barrels of oil and 10 trillion cubic feet of gas underscores the prospectivity of these Prospects. 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, INC.
VICTORIA PETROLEUM NL INTEREST - 18.4%
Victoria Petroleum N.L. has an investment in the U.S.A. oil and gas exploration and production region through its shareholding in Kestrel Energy, Inc. Victoria Petroleum N.L. holds 18.4% of the common stock of Kestrel Energy, Inc. a NASDAQ listed U.S. oil and gas production and exploration company (Code: KEST).
The Company, through Kestrel Energy, Inc., ("Kestrel"), has an indirect interest in Kestrel's net current proved and probable oil and gas reserves as at June 30, 2000, of 6.25 million barrels of oil-equivalent, composed of 0.66 million barrels of oil and 33.6 billion cubic feet of gas.
The proved and probable gas and oil reserves have a Net Present Value of US$49.8 million (A$93.4 million) at a discount rate of 10% at current gas and oil prices of US$28.77 per barrel of oil and US$3.93 per thousand cubic feet of gas.
For the quarter ending September 30, 2000 total Kestrel and Victoria Exploration Inc nett oil and gas production for the quarter is estimated at 13,400 barrels of oil equivalent for an average estimated daily production of 148 barrels of oil equivalent per day.
DEVELOPMENT ACTIVITIES
WYOMING
GREEN RIVER BASIN
KESTREL ENERGY, INC. INTEREST - 100%
Kestrel has a 100% interest in the exploration & development activities in the Greens Canyon Prospect and surrounding area of the Green River Basin, Wyoming, USA.
Two wells have been drilled and completed on the Greens Canyon Prospect. The wells intersected the predicted gas sands, which showed good potential for frac stimulation. Mechanical problems have prevented these wells from reaching their full production potential and currently the wells are producing a combined 0.7 million cubic feet per day into the gas sales line.
As the wells continue to produce, the cleaning-up process is improving daily production. All the wells are still producing frac fluids which, when removed, should further increase production over the coming months. Kestrel also plans to take further measures which, if successful, could result in a material increase in production from the current wells. These measures include repairing the casing of the Greens Canyon #2 well which was damaged during the flowback period after fracing the well with a 70% quality carbon dioxide foam procedure. In addition, Kestrel is in the process of installing compression on its pipeline connecting to Duke Energy's sale line. Adding compression is expected to allow the wells to increase production.
The results of these wells has resulted in a substantial increase in total proved gas reserves at the Greens Canyon Project. Despite the mechanical difficulties experienced with these completions, with the production data gathered over the past months, Kestrel is confident it can now successfully complete additional wells in the Greens Canyon Project.
The potentially significant economic value of the Greens Canyon Prospect and the approximately 34,000 acres in the Green River Basin that Kestrel has the right to explore in the immediate vicinity of the Greens Canyon Prospect will be developed over the course of 2001. The Green River Basin is a significant gas producing region in the USA.
OKLAHOMA
AMBER NORTH EAST FIELD
KESTREL ENERGY, INC. INTEREST 32.7-37.5%
Kestrel reported during the quarter that the development well Turner 3-14 in the Amber North East Field, Oklahoma was successfully completed as a gas producer flowing 1.10 million cubic feet per day. A second development well one mile to the south, Turner 1-23 has subsequently also been successfully completed as a gas producer flowing 1.11 million cubic feet per day.
WA-254-P
OFFSHORE CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - Part 2 (9.31%), Parts 1, 3 & 4 (6.17%)
The permit comprised of flow graticular blocs covers an area of 322 square kilometres on the Legendre Fault trend in the offshore Carnarvon Basin.
In April 1999 the Sage 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 WA-254-P Part 2 or adjacent permits, should a significant discovery be made.
Additional prospects generated over the year include the Argos Prospect (potential for 11 million barrels of oil), the Cerebus Prospect (potential for 16 million barrels of oil) and a host of additional leads that require additional work. The Argos Prospect is particularly significant in that it lies immediately to the south of the developing 70 million barrel Legendre Oilfield.
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 - 5%
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 45 million barrel Stag Oilfield, currently producing in excess of 25,000 barrels of oil per day.
In September 2000, two wells, Chamois-1 and Rhebok-1, were drilled with different objectives in WA-261-P.
The Chamois-1 well was drilled 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.
The Rhebok-1 well targeted the up-dip pinchout of the Stag Sand, the reservoir of the nearby Stag Oil Field. The reservoir objective although containing oil shows was poorly developed at this location and the well was abandoned.
Apache Energy is the Operator of the WA-261-P Joint Venture.
EP 325
OFFSHORE CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - 38%
EP 325 covers an area of 1,093 square kilometres in the Exmouth Sub?basin of the central Carnarvon Basin and contains the 20 billion cubic feet Rivoli Gas Field.
The most recent activity in the permit centered on the drilling of the White Opal-1 well. The well spudded on 10th March 2000 and was drilled to a total depth of 2,597 metres. Although hydrocarbon fluorescence was observed in sands of the target Mungaroo Formation, the well contained no producible hydrocarbons and was abandoned.
Subsequent to the drilling, Victoria Petroleum acquired the interests of Kestrel Energy, Mobil and Australian Worldwide Exploration.
The Joint Venture will now focus 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, it is anticipated that a market will soon develop for natural gas in the Cape Range Peninsular to which EP 325, the 20 billion cubic feet Rivoli Gas Field and 25 million barrel or 32 billion cubic feet gas potential Cooper Prospect are ideally located.
Victoria Petroleum NL is the Operator of the EP 325 Joint Venture.
EP 359
CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST- 55.85%
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.
The review of the prospectivity of the permit recently carried out has developed two prospects in the Learmonth area that have the potential to contain significant quantities of oil or gas.
The Nabalgee Prospect targets Permian reservoirs, and being a tilted fault block the structure is quite large. As this objective has not been drilled in the vicinity the reservoir properties are speculative at this stage.
The Wogatti Prospect is located up-dip from the Trealla-1A well, that was drilled in 1991. Trealla-1A encountered hydrocarbon fluorescence in the objective Wogatti Sandstone, and new mapping has shown the well to be located off-structure. The Wogatti Prospect has the potential to contain up to 46 million barrels of oil.
The Wogati and Nabalgee prospects will be developed to drillable status over the next twelve months and presented to industry as farmin opportunities.
The October 2000 commencement of oil production from the nearby Rough Range-1B well has highlighted the viability of even small fields in this region to be economic, given the strength of Australian oil prices.
Victoria Petroleum NL is the Operator of the EP 359 Joint Venture.
EP 41
CARNARVON BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM N.L. INTEREST - Parts 1 and 2 - 90%
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, recently re-drilled as Rough Range-1B, lies within EP 41 Part 3, adjacent to EP 41 Part 1.
Due to the activity in Part 3 by Empire Oil and Gas on the Rough Range Block (Part 3) and Rough Range Fault trend, Victoria's portion of the permit on this trend is considered to be a strategic holding that will increase in value as the petroleum potential of the Cape Range region is developed.
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 - 20%
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 farmed into the permit with the intention to drill at least 10 wells on the permit to earn an 80% interest. The first well is scheduled to commence in December, 2000.
In addition to the shallow gas sand identified by earlier drilling, Tri-Star have indicated interest in the deeper potential, which may become a focus of their farmin drilling.
With the virtual cessation of exploration drilling in Queensland outside the known producing areas, Queensland is facing a natural gas deficit in the near future, so Reids Dome has the potential to become an important new supply of gas to the Queensland market.
Tri-Star 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.
During the year a farmout agreement was finalised with Queensland Gas Company Limited (QGC), in which QGC is to commence a two well Coalbed Methane (CBM) drilling program in the Walloon Coal Measures of the Cherwondah Anticline by February 2001 to earn a 60% interest. The first CBM well is currently scheduled for drilling by QGC in November, 2000.
Victoria Petroleum NL will have a 8% free carried interest in the QGC drilling program.
QGC's independent expert report of July 2000 states that the Wallon Coal Measures of ATP465P have the potential to contain 500 billion cubic feet of recoverable Coalbed Methane gas reserves.
Interest in methane gas produced from coal deposits is increasing in Australia, particularly in the Bowen Basin. ATP465P is adjacent to the Peat Coalbed Methane field which is awaiting completion of the pipeline linking it to Brisbane markets.
Roma Petroleum NL is the Operator of the ATP465P 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.
Legal issues that have delayed the testing of the Yarrabend-5 gas well have been resolved, and the Joint Venture is moving to production test the well 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 in 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, QUEENSLAND
VICTORIA PETROLEUM N.L. INTEREST - JURASSIC - 75%, REMAINDER - 45%
ATP 574P covers an area of 616 square kilometres within the central and southern portions of the Bowen and Surat Basins in Queensland.
During the year a farmout agreement was completed with Queensland Gas Company Limited (QGC), in which QGC will drill up to three coal-bed methane (CBM) wells in the permit. The first well is currently scheduled for December, 2000.
Victoria Petroleum NL will have a 18.75% free carried interest through the QGC drilling program.
QGC's independent experts report of July 2000 states that the Wallon Coal Measures of ATP574P have the potential to contain 650 billion cubic feet of recoverable coal bed methane gas reserves.
Victoria Petroleum NL retains all its rights in the Jurassic 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 19 million barrels, if oil is present. Drilling of North Giligulgul-1 is planned for the first quarter 2001, subject to farmout.
Victoria Petroleum NL is the Operator of the ATP 574P Joint Venture, with the CBM drilling program being managed by Queensland Gas Company Limited.
ATP 589P
COOPER / EROMANGA BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. INTERESTS: BARCOO BLOCK - 60%,
SPRINGFIELD AND REGELEIGH BLOCK - 24%, BRIGHT SPOT BLOCK - 15%
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.
Victoria Petroleum NL is the Operator for the Barcoo Block of ATP 589P, Part 1 and ATP589P, 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, ROOKWOOD BLOCK - 34.22%
REMAINDER - 60%
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 first quarter of 2001 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.
In March 2001, a well called McNamara Deep-1 is scheduled to be drilled in the adjacent permit PEL 72.
The McNamara Deep Prospect covers the boundary of PEL 57 and PEL 72, and the PEL 57 Joint Venture is contributing 33% to the cost of McNamara Deep-1 in Joint Venture with PEL 72.
The McNamara Deep Prospect is estimated by Origin Energy to have the potential to contain recoverable gas reserves of up to 170 billion cubic feet of gas, of which 56 billion cubic feet lies within PEL 57.
Origin Energy is the operator of the PEL57 Joint Venture and the adjacent Katnook/Hazelgrove producing gas fields.
EPP 24
OTWAY BASIN, SOUTH AUSTRALIA
VICTORIA PETROLEUM N.L. 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. Appraisal of the Troas Discovery requires a large investment in new 3D seismic acquisition, and consequently the EPP 24 Joint Venture has been attempting to attract farmin support for this project. In the meantime, steps are being taken to protect the Joint Venture's investment in the Troas Gas Field by making an application for a Retention Lease, which may enable the current Joint Venture to maintain its interest in the Troas Gas Field while relinquishing the surrounding acreage.
Victoria Petroleum N.L. considers the offshore Otway Basin to have all the parameters to be a future major oil and gas province.
Origin Energy is the Operator of the EPP24 Joint Venture.
PRA 436
NEW CALEDONIA BASIN, NEW CALEDONIA
VICTORIA PETROLEUM N.L. INTEREST - 24.06%
Following a comprehensive exploration effort spanning four years, involving geological mapping and a seismic survey, the financing of Cadart-1 on the Gouaro Prospect in New Caledonia was completed in October 1999, and the drilling of Cadart-1 on the Gouaro Prospect, using a drilling rig mobilised from Perth, Western Australia, commenced drilling on the 24th November 1999.
The Gouaro Prospect is a large anticlinal structure located near Bourail on the south coast of New Caledonia. Earlier drilling in the 1950's combined with oil and gas seeps on the island indicated the potential for oil and natural gas accumulations in suitable structures. With the dependency of New Caledonia's electricity supply on imported diesel and fuel oil, the great value of any natural gas discovery was apparent.
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.
During the drilling, natural fractures in the sedimentary rocks were noted, often with oil-staining and live oil shows. It is believed that the gas flow in Cadart-1 came from these fracture systems, and while the gas flow was relatively modest, it demonstrated the presence of recoverable free gas in the Gouaro Prospect. It is possible that directional drilling techniques and hydraulic fracturing of the well in the future may enhance the quantity and permeability of these fractures, resulting in a commercial gas flow.
The continuing 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. 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.
Petroleum Prospecting Licence PPL 213 (formerly PPL 106) situated in the Papuan Fold belt of the onshore Papuan Basin, Papua New Guinea covers an area of 3,560 square kilometres. Three wells have been drilled in the permit, Tarim-1, Menga-1, and Tumuli-1.
The updip Menga Prospect immediately adjacent to Menga-1 is situated on the Menga Anticline, a surface mapped anticlinal feature lying on trend with the Pnyang gas discovery 40 kilometres to the southeast. The updip Menga Prospect is interpreted from geologic field data and the drilling results of Menga-1 to have an updip most likely potential of 66 million barrels of oil or 83 billion cubic feet of gas, if hydrocarbons are present.
In the event of a hydrocarbon discovery updip to Menga-1, the presence of the Ok Tedi mine facilities and the Tabubil township, 6 kilometres to the west, offer the potential for immediate gas development and market of a similar nature to the Hides Gas Field and supply to the Porgera mine project. The presence of the Ok Tedi mine and associated infrastructure provides an important access route for any oil reserves discovered in the Menga area to markets in Singapore via the Tabubil-Kiunga Road or pipeline option to Kiunga and use of bulk carriers on the Fly River.
Santos Ltd is the Operator of the PPL 213 Joint Venture.
PPL 202
PAPUAN BASIN, PAPUA NEW GUINEA
VICTORIA PETROLEUM N.L. INTEREST - 15%
Petroleum Prospecting Licence PPL 202 covers 3,790 square kilometres, adjacent to PPL 213 and PPL 157. Exploration will focus on the delineation of prospects in both the Fold Belt and Foreland areas of this part of the Papuan Basin, Papua New Guinea
In February 1999 the Stanley-1 well was drilled just across the permit boundary in PPL 157. Although not flow-tested, the well discovered gas-bearing sandstones, again demonstrating the prospectivity of the Foreland province. A significant portion of the Stanley Prospect lies inside the PPL 202 permit.
The Stanley-1 gas discovery follows the significant Elevala gas / condensate discovery of 1 trillion cubic feet of gas and 60 million barrels of condensate and its un-explored downdip oil-leg potential. Positive aeromagnetic anomalies in PPL 202 from broadly gridded surveys show potential for large hydrocarbon accumulations associated with sediment drape over unexplored basement highs, a similar setting to the Elevala discovery.
A separate Paleocene structure, the Champion Prospect, has been mapped in PPL 202 with an interpreted potential to contain up to 385 million barrels of oil, if oil is present.
Santos Ltd is the Operator of the PPL 202 Joint Venture.
Victoria Petroleum N.L., through its wholly owned subsidiary Victoria International Petroleum N.L. holds 18.4% 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 Amber North East Gas Field in Oklahoma. The details of this activity are presented in the previous USA section of Victoria Petroleum NL's interest in this area 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 September 30, 2000, total Kestrel and Victoria Exploration Inc. nett oil and gas production for the quarter is estimated at 13,400 barrels of oil?equivalent for an average estimated daily production of 148 barrels of oil equivalent per day.
Yours faithfully,
JOHN KOPCHEFF
MANAGING DIRECTOR
VICTORIA PETROLEUM N.L.
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