Carnarvon Basin
The Company has concluded an agreement with AIM Listed Black Rock Oil & Gas Plc to acquire a direct 15% interest in petroleum exploration Retention Licence R3 which contains the undeveloped Cyrano Oil Field, located in offshore Carnarvon Basin, Western Australia.
The agreed consideration for this transaction is $40,000 plus 500,000 ordinary OBL shares, or based upon OBL’s closing price of 11 cents per share on Thursday 12 June 2008 (i.e. the effective date of transaction), the gross booked cost translates to $95,000.
The transfer is subject to usual joint venture partner consents and formal registration with Western Australian Department of Industry Resources.
Two wells (drilled in March 2003 and December 2004) delineate the Cyrano Oil Field and the operator Tap Oil has previously delineated gross P50 recoverable “technical oil reserves” of about 1.0 million barrels (net 150,000 bbls) and upside potential gross P10 recoverable resources has been technically assessed as upto 4.0 million barrels (net 600,000 bbls) – based upon these preliminary assessments the indicative acquisition price translates to between A$0.16 to A$0.63 per bbl (undeveloped potential reserves and resources)* - *refer to definitions in Disclaimer
The Cyrano Oil Field is situated in circa 15m of water and less than 700m total depth, is on trend to the nearby undeveloped Nasutus Oil Field (Apache Energy 50% / OMV 50%) discovered in 1999 (similar size undeveloped resource). The R3 Retention Lease was awarded on 5 July, 2006 for a period of 5 years and was originally Exploration Permit EP-364. The Lease obligations are for the joint venture to conduct over the next five years engineering studies and reservoir simulation, technical studies, marketing studies and economic studies culminating in a project feasibility report. With some $10.9 million spent on R3 todate, current R3 Retention Lease work program expenditure obligations are presently a modest gross $20,000 per year (net $3,000 per year OBL share).
It should be noted that the Cyrano Oil Field has serious technical, engineering and development challenges – namely a combination of thin but moveable heavy biodegradable oil and potentially a significant gas cap in an offshore setting. As such, no development is presently planned by the operator TAP Oil.
Nonetheless, the OBL Directors believe that in the current exceptionally high international crude oil price climate and high domestic gas price environment, it is prudent for the Company to progressively build (at modest price) a portfolio with exposure to oil and gas development opportunities that may in time become both economically and technically feasible, should the present commodity price trends persist. |
