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MEO Australia: Quarterly activities summary for Period ended 30 September 2014 [Global Data Point]
[October 23, 2014]

MEO Australia: Quarterly activities summary for Period ended 30 September 2014 [Global Data Point]


(Global Data Point Via Acquire Media NewsEdge) Executive Summary During the quarter, MEO participated in the drilling of the Puka-3 appraisal/development well in PEP51153 onshore Taranaki Basin New Zealand. The well was targeted at a bottom hole location some 500m north of the producing Puka-2 well and sought to intersect thicker Mount Messenger sands than the Puka-1 and Puka-2 wells currently on production. While good quality, thicker sands were intersected, an interpreted Oil Water Contact (OWC) was observed towards the top of the interval, much shallower than expected and effectively rendered the well sub-economic. MEO considers these results have downgraded the Mount Messenger play.



At the conclusion of drilling, MEO became entitled to 30% of oil production from the Puka extended well test and received its maiden oil production revenue on 20th October 2014.

Following a post well review, MEO turned its attention in the permit to the potential of the deeper, more conventional Tikorangi Limestone play, intersected by Douglas-1 in 2012 and recognized at the time of the farm-in to the permit. This is the same play that is productive in the Waihapa and Ngaere fields immediately to the west. Douglas-1 intersected over 145m of Tikorangi limestone with extensive fractures in the lower 50m.


The upper 15m of the limestone exhibited oil shows that terminated abruptly, suggestive of a possible OWC. Mapping of the 3D seismic indicates ~350m elevation can be gained relative to Douglas-1. Resource estimates are in the process of being determined. Once completed, a farmout process will be initiated.

UBS was mandated to undertake a value realization initiative for the Tassie Shoal projects and to consider strategic options for the Company. Several new parties were identified as a result of this process and a data room will remain open until the end of the year. Discussions with resource owners surrounding the proposed Tassie Shoal infrastructure location also progressed during the quarter.

In the previous quarter, MEO and Apache signed an option agreement providing Apache with an option to farm into the Company's AC/P50 and/or AC/P51 blocks in the Timor Sea. Apache had the option to earn a 70% interest in either or both permits by funding 100% of permit activities in the permit renewal period (April 2015) including the drilling of a well in each permit. This option lapsed on 30th September 2014 without being exercised. MEO will consider offers to farmin from prospective partners in the lead up to the permit renewal date.

Cash balance at end of quarter Consolidated cash balance at 30th September 2014 was A$11.8m.

New Zealand: Taranaki Basin PEP 51153 (MEO 30%*, Kea Petroleum Limited 70% %7E Operator) On 7th April 2014 MEO Australia Limited announced its wholly owned subsidiary, MEO New Zealand Pty Limited ("MEO"), had executed binding a binding farm-in agreement (FIA) with KEA Petroleum PLC ("Kea") to earn an initial 30% interest in exploration permit PEP 51153 in the Taranaki Basin, onshore New Zealand.

PEP 51153 comprises two discrete components - Area "A" to the north (19.787 km2), and Area "B" (84.673 km2) to the south. Area A was relinquished in September.

Area B contains the 2012 Puka oil discovery in the Mount Messenger formation. Puka-1 and Puka-2 (2013) are currently producing around 110 barrels oil per day ("bopd") under an extended well test.

MEO is earning an initial 30% participating interest by funding NZ$4m of a Phase I work program capped at NZ$5m. Any investment over this cap will be at the participating interest level.

Within 6 months of completing Phase I, MEO can elect to increase its participating interest to 50% by funding NZ$7.5m of an indicative NZ$9m Phase II work program.

During the quarter the Puka-3 appraisal/development well was drilled targeting thicker Mount Messenger reservoir sands some 500m to the north of the Puka-2 bottom hole location.

Puka-3 reached a total depth of 2,200mMD and intersected approximately 30m as drilled (18m true vertical thickness) of good quality Mount Messenger reservoir section, significantly thicker than expected. A probableOil-Water-Contact (OWC) was interpreted from MDT pressure samples near the top of this interval, significantly shallower than expected, effectively rendering Puka-3 sub-economic. The well was consequently plugged and abandoned. At the conclusion of drilling MEO is entitled to 30% of the oil production from the Puka field.

In MEO's view, the result has downgraded the potential of the Mount Messenger play.

Following the result, MEO resumed its assessment of the potential of the deeper Tikorangi limestone play that has produced over 20 million barrel of oil in the Waihapa field and associated accumulations immediately to the west of PEP 51153. Individual wells at Waihapa and Ngaere have produced in excess of 3 million barrels oil at high production rates.

Douglas-1 drilled by Kea in 2012 intersected oil shows over a 15m interval at the top of a 145m thick Tikorangi limestone interval which is extensively fractured in the lower 50m. The oil shows terminate abruptly below this15m interval, which may suggest a possible OWC. Mapping of the 3D seismic indicates there is potential for in excess of 300m of closure updip of Douglas-1 in a possible trap covering approximately 5 km2. Resource sizeestimates are in the process of being completed in readiness for a marketing campaign aimed at attracting a partner to participate in a proposed exploration well.

Bonaparte Gulf: Petrel Sub-Basin WA-454-P (MEO 50%) WA-454-P contains the Marina gas and probable oil discovery together with the Breakwater prospect and a number of promising leads. MEO was awarded the permit in June 2011 for an initial six (6) year exploration period.

The 601 km2Floyd 3D seismic survey was acquired in early 2012 over the Marina discovery, Breakwater prospect and a number of identified leads.

In July 2013, MEO executed a binding farm-in agreement with Origin Energy for a 50% participating interest in the permit. Origin reimbursed MEO A$5.6m in past costs and will fund 80% of a well capped at A$35m (100% well cost).

During the quarter, MEO launched a marketing campaign to sell a portion of its 50% participating interest to defray MEO's 20% cost exposure to the Breakwater-1 well, scheduled for drilling in 3Q-2015 subject to rig availability and receipt of customary regulatory approvals.

Ashmore Cartier Region, Timor Sea: Vulcan Sub-BasinAC/P50, AC/P51 (MEO 100%) The Ashmore Cartier region is a proven hydrocarbon province with numerous oil and gas fields largely discovered in the 1980's and 90's. Poor seismic image quality and a string of poor exploration results following the early discoveries resulted in a significant hiatus in exploration. PTTEP has recently brought the Montara oil discovery back on line and has achieved drilling success nearby at Cash and Maple. Condensate rich gas was discovered at Crux to the south west.

Tassie Shoal Gas Processing Projects(MEO 100%) During the quarter, MEO continued business development and technical assessment activities with potential midstream investors, including those identified as a result of the Tassie Shoal Value Realisation Initiative ("Realisation Initiative") conducted in conjunction with UBS.

The Realisation Initiative has identified new parties with specific interest in the potential of the Tassie Shoal Methanol Projects ("TSMP") to provide new supply into the global methanol market. Management presentations have been made to these parties. A full technical data room has been opened and is anticipated to remain open for the remainder of 2014. Overall there is strong interest in the Tassie Shoal Projects pending availability of feed gas supply.

With respect to gas supply, MEO continues in its efforts to promote the potential of the Tassie Shoal Projects to all stakeholders and regional resource owners as a logical, cost effective, practical and profitable development path.

To facilitate ongoing consideration, MEO has confirmed to potential gas suppliers its previous advice that a gas price of US$3.15/MMBTU (1 January 2015 basis, raw unprocessed gas (including CO2) delivered to TSMP plant gate) is an appropriate starting point for gas supply pricing negotiations. MEO's analysis indicates this is a competitive gas price against the netback achievable by the parties should they pursue other development alternatives once the capex cost differential is accounted for. This gas price provides a basis for the economic development of the stranded gas resources.

With respect to the Evans Shoal gas resource, following on from the 19th August, 2014 award of a Retention Lease over the Evans Shoal gas field, the Evans Shoal JV corresponded with MEO to advise their forward plans with respect to discussions with MEO and its potential TSMP partners. A preliminary outline Agenda for a planned meeting has been proposed and accepted by the parties, with the proposed meeting deferred to early 2015 to allow the Evans Shoal JV to finalise its roadmap and progress its planned work program.

The Evans Shoal gas discovery is one of a number of potential gas supply sources for a TSMP based development, considering its close proximity (%7Elt;10km), ~28% CO2 content and lack of practical development alternatives. The Tassie Shoal Methanol Projects have the potential to commercialise 4TCF of recoverable raw gas from Evans Shoal over a 25 year gas supply period.

The nearby Barossa gas discovery and the Caldita gas discovery are also potential supply sources. MEO notes market expectation that two additional wells are to be drilled in the Barossa gas field (approximately 16% CO2) with the first of these wells expected to spud in 4Q, 2014. The results from these wells will provide further clarity on gas resource estimates, field productivity and CO2 content which will be key inputs into consideration of potential commercialization opportunities. On this basis, MEO has corresponded with the common JV Operator to confirm MEO's previous guidance regarding the gas supply opportunity.

Both Heron and Blackwood remain potential supply sources pending further appraisal, which is the subject of ongoing discussions between MEO and the current Operator, Eni Australia.

Timor Sea: Bonaparte BasinNT/P68 (MEO 50%, Eni Australia Ltd 50% %7E Operator) Pursuant to a farm-in agreement with Eni Australia (refer ASX release dated 18th May 2011), Eni has earned an initial 50% interest in the Blackwood area of NT/P68 by acquiring the 766km2Bathurst 3D seismic survey and drilling Blackwood-2 Bonaparte Gulf: Petrel sub-BasinWA-488-P (MEO 100%) WA-488-P is located adjacent to MEO's WA-454-P (50%) permit and covers an area of 4,105 km2The permit was awarded to MEO in May 2012 as part of the acreage Gazettal Round.

MEO has identified the giant Beehive prospect that it considers can be readily advanced to drillable prospect status by reprocessing existing 2D seismic data and integrating offset well data. Beehive represents a new play type within the Bonaparte basin, leveraging the 2011 Ungani-1 oil discovery in Carboniferous aged reservoirs in the nearby Canning Basin.

During the quarter, MEO continued to market the Beehive prospect to prospective industry partners considering participating in the Permit Year 3 well (commencing May 2015). The partial sale process remained underway at the end of the quarter.

Ashmore Cartier Region, Timor Sea: Vulcan Sub-BasinAC/P53 (MEO 100%) MEO was awarded AC/P53 as part of an acreage gazettal round in mid-2011. In early 2012, MEO acquired 169 line km of the Zeppelin long offset 2D seismic data featuring a tie line through the Talbot oil discovery in the adjacent Retention Licence AC/RL2.

There was no meaningful activity on this permit during the quarter.

North West Shelf: Offshore Carnarvon BasinWA-360-P, WA-361-P (MEO Operator) WA-360-P (MEO 62.5% %7E Operator) The permit was renewed in early 2012 for an additional 5 years.

During the quarter, the Ananke-1 well completion report became open file. MEO acquired the open file data and commencedintegrating the results into its geological understanding of the area, in particular, the implications of the result on MEO's mapped Maxwell prospect.

MEO has made its participating interest in the permit available for acquisition.

WA-361-P (MEO 50% %7E Operator) The permit was renewed in early 2011 for five years. MEO has made its participating interest in the permit available for acquisition.

(c) 2014 GlobalData Provided by SyndiGate Media Inc. (Syndigate.info).

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