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AUSTRALIA
NEW CALEDONIA
PAPUA NEW GUINEA
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 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 of 5 million barrels. 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 in those areas.
Additional prospects generated over the year include the Kleopatra Prospect (potential for 30 million barrels of oil), the Cerebus Prospect (potential for 15 million barrels of oil), the Collier Prospect (potential for 40 million barrels of oil) and a number of additional leads that require additional work.
The Argos Prospect situated in WA-254-P is adjacent and on trend with the 44 million barrel Legendre Oil Field to the northeast and will be targeting a 3D seismically defined target with the potential to contain up to 11 million barrels of oil, if oil is present.
Argos No. 1 will be drilled in November 2002 by the permit Operator, Apache Energy to a total depth of 2040 metres.
Additional prospects with a cumulative target potential of up to 80 million barrels have also been mapped by the Operator Apache Energy as present within the permit.
The Argos Prospect is significant in that it lies 4 kilometres to the south of the producing Legendre Oil Field and its associated production producing facilities and infrastructure.
Your company rates very highly the prospectivity and chance of oil exploration success for Argos Prospect to be drilled in through November 2002.
Given the proven presence of oil within the permit, as shown from the previous Sage No. 1 oil discovery, and immediately adjacent to the permit as seen at the Legendre Oil Field, a commercial oil discovery at Argos could lead to oil production in January 2004 for your company.
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 - 12.5%
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 approximately 15,000 barrels of oil per day.
Victoria Petroleum NL through a farmin agreement with Strike Oil NL has doubled its interest in the permit WA-261-P to 12.5%.
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 No. 1, Rhebok No. 1 tested a Stag Sand pinch out trap up dip and south of the Stag Oilfield. Potential, gross unrisked reserves of up to 45 million barrels of oil recoverable were estimated. 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 No. 1 and Springbok No. 1, east of Chamois No. 1 and southeast of Oryx No. 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) up to 23 million barrels of oil (P10), if oil is present.
The Ceres Prospect will be drilled, following the drilling of Argos-1, to a depth of 1012 metres in mid November 2002 by Apache Energy.
In the event of a commercial oil discovery, production from the Ceres Prospect would be tied by subsea completion and pipeline to the Stag Platform, 22 kilometres to the north east with first oil production and cash flow anticipated in early 2004.
Victoria Petroleum is confident the Ceres Prospect has all the attributes required to provide a hydrocarbon trapping environment similar to the 45 million barrel recoverable Stag Oil Field 22 kilometres to the north west.
Given the proven presence of oil within the permit as shown from the Chamois No. 1 oil discovery immediately adjacent and down dip to the Ceres Prospect, a commercial oil discovery at Ceres No. 1 could lead to oil production from this permit in early 2004 for your company.
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 - 18.3%
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 45 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 that will be the focus of exploration attention.
The potential size of the target leads range from 5 to 100 million barrels of oil recoverable in an area of favourable infrastructure.
A 3D seismic survey was carried out in the western portion of the permit and has indicated several promising leads and prospects in this area, with the 9 million barrels of oil potential Southeast Wandoo Prospect, 3 kilometres from the Wandoo Platform considered an immediate future drilling candidate for farmout in 2003. Interpretation of the seismic data acquired during this survey is continuing.
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 21 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 the first half of 2003 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 production of oil 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.
EP 413
ONSHORE NORTH PERTH BASIN, WESTERN AUSTRALIA
VICTORIA PETROLEUM NL INTEREST - 5.7685%
EP 413 covers an area of 539 square kilometres and is situated in the North Perth Basin seven kilometres to the south of the giant 400 billion cubic feet Dongara Gas Field.
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 new field oil discovery at Jingemia-1, the Arc Energy Hovea No. 1 oil discovery and Hovea No. 2 gas 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 and has been confirmed oil bearing by the recent Jingemia-1 oil discovery.
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, in the Dongara Sandstone horizon, if oil is present and 27 billion cubic feet of recoverable gas in the basal Irwin River Coal measures/High Cliff Sandstone, if gas is present.
Jingemia No. 1 commenced drilling in mid October 2002 and is drilling to a depth of 2,900 metres to test the Jingemia Prospect, a tilted fault block prospect similar in structural style to the Hovea Oil and Gas Field discovery 5 kilometres to the northeast.
An oil column of between 29 and 33 metres was intersected in the Dongara Sandstone target in late October 2002 at 2,414 metres, confirmed by subsequent wireline logging and testing.
The oil bearing Dongara Sandstone reservoir has been cased off and the well is now drilling ahead to test the next target, the potentially gas bearing High Cliff Sandstone.
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 a major part of Victoria Petroleum NL's share of the AFE drilling costs of the Jingemia No. 1 well.
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.
Additional prospects in the permit, Freshwater Point North and Stockyard are interpreted from seismic and adjacent drilling data to have the potential to contain mean recoverable reserves of 38 million barrels of oil and 42 billion cubic feet of gas, if oil and gas are present.
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 offshore Cliff Head and onshore Hovea oil and gas discoveries and associated infrastructure, and within the permit, the recent Jingemia oil field discovery.
A major increase in drilling activity in the offshore Cliff Head area in early 2003 will continue to focus industry interest in this prospective northern part of the Perth Basin.
Origin Energy is the Operator of EP 413.
SOUTH AUSTRALIA
PELA 104 (CO99-E)
COOPER/EROMANGA BASIN
VICTORIA PETROLEUM N.L. INTEREST - 80%
Your company was advised in early October 2002, by the Office of Mineral & Energy Resources, South Australia, that Victoria Petroleum NL is the successful applicant for Block CO99-E to be known as PELA 104.
Your company considers itself very fortunate to be given the opportunity to accept the offer of Block CO99-E as this Santos released acreage attracted the second highest bid when initially offered in November 1999.
PELA 104 covers an area of 1,069 square kilometres with it eastern border being the western boundary of the Tirrawarra Oil Field, the largest oil field in the Cooper Basin and onshore Australia with an estimated recoverable reserves of 70 million barrels of oil. Block CO99-E also surrounds and borders the Fly Lake Oil & Gas Field.
Preliminary mapping within the block indicates up to twenty eight prospects and leads are present with the potential for a very large Permian stratigraphic trap on the western area of the permit. Further encouragement for the presence of commercial oil and gas within Block CO99-E is provided not only by it proximity to the proven and current producing oil and gas fields at the eastern end of the block but also the presence of the Callibona-1 oil discovery situated within the block and also the recent Sellicks-1 Permian oil discovery (2100 bopd) by Beach and Cooper Energy ontrend 30 kilometres to the south.
Victoria Petroleum NLs' large equity interest of 80% in this highly prospective Cooper Basin block provides an excellent first entry into the South Australian portion of the Cooper Basin where the latest round of 2002 drilling on Santos released acreage has an 80% oil discovery success rate.
As a further indication of the perceived prospectivity of this block by the industry, several strong expressions of interest from potential farmin parties have already been received and should result in the drilling of two to three wells in the block in the second half 2003 on significant oil and gas targets with a large free carried interest for your company.
Victoria Petroleum NL is the Operator for PELA 104.
QUEENSLAND
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.
Victoria Petroleum NL is the Operator for the Barcoo Block of ATP 589P, Part 1 and ATP 589P, Part 2.
This Queensland permit along with the significant interest in PELA 104 in the South Australian portion of the Cooper/Eromanga Basin makes your company a significant player in the newly resurgent Cooper/Eromanga Basin.
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 last 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 for potential reservoir stimulation at a later date.
Victoria Petroleum has resumed as the Operator of ATP 333P Joint Venture, and is planning to work up locations for a two well drilling program following farmout, in the northern part of the Reids Dome in early 2003.
ATP 465P
BOWEN BASIN, QUEENSLAND
VICTORIA PETROLEUM N.L. INTEREST - 5% (PLA 171); 8% (ATP 465P)
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.
After dewatering, these wells produce significant gas flow rates. Trafalgar No. 1 demonstrated that the coals of the Walloon Coal Measures are gas saturated and the 360 barrels of water production indicates that the coals have good permeability. Gas saturation and good permeability are the essential criteria for successful coalbed methane production.
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.
Victoria Petroleum NL has a 5-8% contributing carried interest in the QGC drilling program.
Current results indicate the Walloon Coal Measures of ATP 465P/ATP 695P/PLA 171 have the potential to contain 350 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. ATP 465P is adjacent to the Peat Coalbed Methane field which is now producing sales gas into the pipeline linking it to Brisbane markets.
An additional exploration program being carried in the permit is the drilling and fracture stimulation of the Cherwondah 317 billion cubic feet tight gas field planned for late 2002 by farminee partner Ausam Resources.
Victoria Petroleum will have a 4% free carried interest through this program.
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 indefinitely.
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 - 18.5% (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 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.
Victoria Petroleum NL has an 18.75% interest in the QGC 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.
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.
A 15km seismic survey carried out in February 2002 to further define the drilling location for North Giligulgul-1 and the areal extent of the North Giligulgul Prospect, confirms the potential for the prospect to contain up to 16 million barrels of recoverable oil updip from a 1964 Union Oil Co. well with strong oil shows, if oil is present. Drilling of North Giligulgul-1 is planned for early 2003, 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 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 late 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.
In May 2001, a well called McNamara Park-1 was drilled in the adjacent permit PEL 72 without encountering hydrocarbons.
Exploration has now focussed on the north western portion of the area with the Honans Scrub seismic program of 60 kilometres over the Orana Prospect 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 further 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 Maipe (687 million barrels of oil recoverable), Muir (424 million barrels of oil recoverable) and Guy River (423 million barrels of oil recoverable) prospects. These prospects 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.
A further field program of geotraversing is planned to be carried out in late 2002.
Santos Ltd is the Operator of the PPL 228 Joint Venture.
CALIFORNIA
SAN JOAQUIN BASIN
VICTORIA PETROLEUM N.L. INTEREST: 3.75-100%
San Antonio Prospect Development Projects, Salinas Basin
During the year your company participated in the drilling of the San Antonio Prospect which resulted in the discovery of a cumulative net oil bearing interval of 314 metres in the target Vaqueros Sand and Monterey Shale horizons.
Fracture stimulation and testing operations to determine the ability of these target horizons to produce oil to surface at commercial rates are currently in progress. Initial indications are that down hole conditions are favourable for fracture stimulation as shown by the initial oil flow to surface of 120 barrels of oil and cumulative production of 300 barrels of 38° API oil.
Further encouragement for the ability of the San Antonio fracture stimulated horizons to produce greater quantities of oil are provided by the adjacent production of 500 million barrels of oil from the San Ardo Field, 12 kilometres to the north. Any oil and gas produced to surface in the San Antonio well and prospect are commercially very attractive as an oil and gas pipeline runs within 400 metres of the San Antonio-1 well site.
In late October 2002 your company participated in the exploration drilling of the River Prospect lying between the San Antonio Prospect and the San Ardo Field. River No. 1 was subsequently plugged and abandoned as the hydrocarbon shows encountered were not considered commercial.
Vallecitos Oil Field Development Project
Initial development drilling on the Vallecitos West development area in June 2002 was not successful as the Vallecitos West-1 development well was drilled too close to the bounding fault for the West Vallecitos development area.
Your company considers successful development drilling on the relatively shallow western and southern areas of the Vallecitos Oil Field has the potential to increase recoverable oil reserves by up to 5 million barrels and increase oil production at rates up to 1,200 barrels of oil per day assuming a successful 3 well development program.
The next Vallecitos development well is planned to be drilled in April 2003 following a seismic survey in November 2002. In the event of the discovery of the oil and gas reserves considered to be present in the Vallecitos development area, production from the new development wells can be tied very quickly in to the existing oil production facilities of the Vallecitos Oil Field.
Kingfisher Project
The Kingfisher Prospect drilled in September 2001 by the Kingfisher-1 well, indicated a potentially hydrocarbon bearing zone within the Monterey Formation of 126 metres.
Further confirmation of the hydrocarbon potential of the upper Monterey zone was provided by the wireline logs which had similar characteristics to logs from oil producing Monterey zones on trend to the south.
Based on the very encouraging results obtained from the upper Monterey Formation while drilling Kingfisher No. 1 and post well valuation it is considered that Victoria Petroleum has a potentially significant Monterey Formation hydrocarbon asset. The realisation of the potential oil or gas reserves in the Monterey will require re-entry of the Kingfisher No. 1 well and horizontal drilling and fracture stimulation within the upper Monterey Formation.
Evaluation of the ability of the Monterey Formation in the Kingfisher area to produce gas from fractured horizontally drilled Monterey Formation is currently being provided by the adjacent Monterey horizontal drilling by Tri-Valley Oil & Gas Company at the Sunrise-Mayel No. 2H well which has reported encouraging gas shows.
The Sunrise-Mayel No. 2H was reported successfully fractured in the horizontal well bore drilled within the Monterey Formation. Post-fracture operations flowback commenced in September 2002. A flow of gas to surface from the Sunrise-Mayel No. 2H well will enhance considerably the industry perceived potential of the Monterey Formation to produce significant commercial flows of gas in this part of the basin in the company's Kingfisher Prospect area and also the adjacent Raven and Condor Prospect areas.
Your company is confident that the industry interest generated by a successful fracture stimulation and flow to surface of hydrocarbon from the Monterey Formation in the Sunrise-Mayel No. 2H well will lead to farmin drilling in the near future at the Kingfisher Prospect and the adjacent Raven and Condor Prospect areas. Your company is well positioned in this area of Monterey interest with approximately 9,550 net leasehold acres.
Eagle Oil Pool Development Project
During 2001, drilling of the company's Eagle Oil Pool Development Project resulted in the successful drilling of a 271 metre horizontal well bore leg into the Gatchell Sandstone oil reservoir, oil and gas productive at the rate of 223 barrels of oil per day and 0.7 million cubic feet per day in the initial Mary Bellocchi-1 well drilled in 1986.
Well site analysis indicated an interpreted 90 metres of oil pay to have been drilled. Regrettably technical difficulties encountered while drilling have prevented immediate testing of the interpreted oil pay.
The resumption of completion and testing operation of the suspended horizontal well bore in Eagle No. 1 is planned to take place in the first half of 2003 following the completion of the current engineering analysis, the resolution of a payment dispute with a joint venture partner and remaining joint venture partner approvals.
The drilling results to date confirm the Eagle Oil Pool Development Project is essentially low risk in geologic nature with the risks being of an engineering nature associated with deep horizontal drilling. The commerciality of the oil and gas reserves present in the Eagle Oil field is dependent on the oil and gas flow rates obtained from horizontal well bores drilled into the field.
The indicated potential recoverable reserve of up to 24 million barrels of oil and 62 billion cubic feet of gas for the Eagle Oil Pool make the Eagle Oil Pool an attractive target.
With the current price of oil around US$25 per barrel (Australia $48 per barrel) and the price of gas in Southern California of US$3.20 per thousand cubic feet (Australian $6 per thousand cubic feet), with a 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.
In order to maximise your compnay's chances of a commercial success, the current California drilling program focus is on "close in" drilling adjacent to proven oil production as in the San Antonio/River and Vallecitos areas.
Information contained in this report relating to hydrocarbon reserves was compiled by the Managing Director of Victoria Petroleum NL, J. T. Kopcheff, BSc (Hons Eco Geol), MIMM, MPESA, MAAPG, MSPE, who has had 30 years experience in the practice of geology.
Yours faithfully,
JOHN KOPCHEFF
MANAGING DIRECTOR
VICTORIA PETROLEUM N.L.
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