Permit Summary

PEL 91 is located in the South Australian Cooper Basin and covers part of the south-western flank of the Patchawarra Trough. The permit was initially granted on 8 January 2002 for a five year term. In 2008 the permit was renewed for the second term and a third of the initial permit area was relinquished. The renewed area of PEL 91 is 1,972km². Due to prolonged periods of flooding in Cooper Basin in 2010 and 2011 Drillsearch received an extension and suspension of permit conditions for PEL 91. The new expiry date is 4 June 2014.

In 2003 Beach Energy farmed into and acquired a 40% interest in PEL 91 and following completion of the farmin work obligations PEL 91 is now held on a 60/40 basis. Beach is the technical operator of PEL 91.

PEL 91 is located in an ‘oil fairway’ on the Western Flank of the Patchawarra Trough. A number of recent oil discoveries were found in the blocks adjacent to PEL 91. To the south, in PEL 92, discoveries include Sellicks, Christies, Parsons and Callawonga oil fields and most recently Perlubie, Butlers and Silver Sands oil fields. Additionally, to the north in PEL 104, new oil fields such as Growler, Wirraway, Tigershark, Tigercat and Warhawk and further north in PEL 111, Charo and Snatcher oil fields.

Encouraged by these discoveries, Drillsearch and its Joint Venture partner, Beach have identified new drilling targets based on the 2008 Modiolus 3D Seismic Survey in the southwest corner of PEL 91 and drilled two exploration wells in August 2009. One well, Chiton-1, was the first commercial oil discovery in the permit. Oil production tested at over 2,400 barrels of oil per day and an estimated P50 recoverable reserves of 0.12 million barrels. The second well, Marino-1 was a sub-commercial oil discovery with a six metre interval of oil shows within the Birkhead Formation. Chiton-1 oil well started producing in February 2010.

Recent Activity

The PEL 91 Joint Venture has agreed to proceed with an accelerated multi-field development program for the Bauer, Hanson and Snellings new oil discoveries. The program includes:

• Drilling and completion of three new production wells on the Bauer oil discovery;
• Completion of the Bauer-1, Hanson-1 and Snellings-1 discovery wells as production wells; and
• Installation of necessary initial surface production facilities, including gathering pipelines, dewatering and evaporation facilities, oil storage and crude load-out facilities.  

The Aquillus 3D seismic program commenced on 24 August 2011 and will cover approximately 478km² and will provide further information on 25 prospects previously identified using the Cadulus 2D seismic. The Undatus seismic survey started on 16 August 2011 and will shoot 252 line km 2D covering approximately 6 prospects identified on existing 2D seismic. Collectively, the Aquillus and Undatus seismic surveys are covering prospects targeting up to 93MMbbls¹ gross unrisked prospective resources (High).

The use of 3D seismic in the Western Flank Oil Fairway is key to the identification of Birkhead Formation channel prospects and achieving the high exploration drilling success rates so far realized in PEL 91. The seismic acquisition is being undertaken by Terrex Seismic and is expected to be completed by the December Quarter 2011.

Following the highly successful PEL 91 Western Flank Oil 5-well drilling program, the Joint Venture is in the process of agreeing the expansion and continuation of the program with additional exploration, appraisal and development drilling. The Joint Venture is in the process of determining additional appraisal and development drilling locations for both the Hanson New Oil Discovery (up to 1 mmbbls recoverable oil – gross) and the Bauer New Oil Discovery (up to 2 mmbbls recoverable oil - gross).

In addition the Joint Venture is also planning other additional appraisal, development and exploration drilling locations within the existing Modiolus 3D seismic. One of which being the new exploration well at Basham-1 (formally Knights-1) which will target the major Birkhead Formation Channel located due south of the Arno-1 New Oil Discovery targeting recoverable oil of 900,000 bbls (Mean) up to 2 mmbbls (High) gross recoverable oil.

It is anticipated that the second stage of the expanded drilling program will commence in the December quarter 2011.