PEL 106 – South Australian Cooper Basin

Drillsearch (Operator) 100% – subject to farmin interests

PEL106 is located in the South Australian Cooper Basin and covers the southern-central portion of the Patchawarra Trough.  PEL106 was originally granted on 9 April 2003 for an initial term of five years with an option to renew. The six month suspension and extension period was granted in the late 2007. The permit was renewed for a further five year term on 9 October 2008. 50% of the original permit area was relinquished. The renewed area of PEL106, 504 sqkm which is exactly 50% of the original permit area of 1008 sqkm. The new permit term expires on 8 October 2013.

Exploration to date has been based on conventional Cooper-Eromanga Basin hydrocarbon system concepts.These contend that hydrocarbons are sourced from Permian age coals and shales that also act as regional and local seals. The regional seals constrain migrating hydrocarbons within the Permian section preventing vertical migration into the shallower Jurassic (Eromanga Basin) section thus forcing the hydrocarbons to move laterally updip towards the basin margins. To date there has been no evidence of vertical hydrocarbon leakage into the shallower Jurassic section within the bounds of PEL106. Local sealing by coals and shales is evidenced by a number of hydrocarbon accumulations (mostly gas) within the bounds of PEL106, most notably the Raven Gasfield, operated by Santos, that has produced approximately 40BCF of gas to date with an estimated ultimate recovery of about 70BCF.

Over the first term of the licence the Drillsearch, with assistance from farminees, has brought about the drilling of eleven (11) wells, resulting in ten (10) gas discoveries and one (1) dry hole. All of the gas discoveries were cased and suspended. The wells are listed below in chronological order:

Of the ten gas discoveries, eight have been completed and tested with varying amounts of success.  The most prolific producer, Middleton-1 tested gas at a sustained rate of 10.0 MMCFGD for 20 days during an extended production test.  Smegsy-1 was completed, connected via a 4.5 km pipeline to the South Australian Cooper Basin Producers (SACBP) gathering system and sold gas into that system until unexpected water production killed the well.  The Smegsy Joint Venture negotiated the first third-party well tie-in agreement and maintenance agreement with the SACBP.  All of the wells are currently shut-in awaiting suitable commercial arrangements to connect them to market.  Work on a Gas Commercialisation strategy is described in "Gas Commercialisation".

In order to generate drilling targets and reduce geological risk, Drillsearch also participated in the acquisition of 500 line kilometres of 2D seismic data and 577 square kilometres of 3D seismic data in PEL106.  At the time of acquisition, the Spinel 3D Seismic Survey was the largest exploration 3D seismic survey ever acquired in onshore Australia.  The combination of the Spinel and Paranta 3D datasets will form the basis of future exploration and development operations in PEL 106.  Exploration will continue to focus on defining Permian structural-stratigraphic targets within the Patchawarra Trough and its western flank.