Following recent reviews of geological data and fracture modelling analysis, Central Petroleum Limited (
Gas at the Palm Valley field has predominantly been produced from the reservoir comprising the Pacoota-1 interval ("Pacoota-1") of the Pacoota Sandstone. The top of the Pacoota-3 interval is located approximately 90m below the Pacoota-1 formation.
The PV12 well is expected to intersect the Pacoota-3 formation later this month as it drills to the PV Deep exploration target, the Arumbera formation. Central and its joint venturers, New Zealand Oil & Gas Limited ("NZOG") (
1. Running additional diagnostic logs on the Pacoota-3 after drilling through the formation.
2. Purchasing certain long-lead equipment in advance of a final JV decision on appraising the Pacoota-3 interval in order to preserve the opportunity to include it in the PV12 drilling program.
3. Drilling an appraisal lateral into the Pacoota-3 interval in the event the PV Deep exploration target is unsuccessful. This would then be followed by the currently planned Pacoota-1 appraisal lateral should the Pacoota-3 lateral be unsuccessful.
Integration of the Pacoota-3 appraisal program could result in changes to the timing, sequence, duration and potential costs of the current drilling program.
A final JV decision on the Pacoota-3 appraisal would be subject to technical results obtained after drilling through the interval and the outcome of the PV Deep exploration target.
A key driver for appraising the Pacoota-3 formation as part of the PV12 drilling program is that the Pacoota-3 lateral could be quickly connected to the existing Palm Valley production facilities and sold into the currently strong gas market.
Exploration program costs
The PV12 and Dingo-5 well costs are exceeding initial forecasts. These cost increases are, in part, driven by:
- increased fuel & freight costs, which are particularly material given the remote location,
- increased cost of civil works and equipment costs, and
- delays in initial rig mobilisation to site.
The additional program costs up to 30 April total approximately $3.1 million (gross JV), without using any contingency. Central is pursuing a number of opportunities to mitigate future program cost pressures.
Central's share of costs for the PV12 and Dingo-5 wells are being carried by NZOG and Cue under an asset sale that was completed on 1 October 2021.
Message from the CEO
Leon Devaney, Managing Director and CEO of Central said, "We are seeing cost pressures throughout many aspects of the drilling program. Some of these are one-off expenses, however some cost pressures, such as higher diesel prices, are anticipated to continue, making it important to identify cost mitigation opportunities where possible. On a positive note, the Pacoota-3 formation could be a very cost-efficient opportunity to appraise an additional gas target within the PV12 drilling program, something particularly attractive given the current strong gas markets. We will continue to update the market as the exploration drilling program moves forward."
*To view the Well schematic, please visit:
About Central Petroleum Limited
Central Petroleum Limited (Central) is a well-established, and emerging ASX-listed Australian oil and gas producer (ASX:CTP). In our short history, Central has grown to become the largest onshore gas producer in the Northern Territory (NT), supplying industrial customers and senior gas distributors in NT and the wider Australian east coast market.
Central is positioned to become a significant domestic energy supplier, with exploration and development plans across 180,000 km2 of tenements in Queensland and the Northern Territory, including some of Australia's largest known onshore conventional gas prospects. Central has also completed an MoU with Australian Gas Infrastructure Group (AGIG) to progress the proposed Amadeus to Moomba Gas Pipeline to a Final Investment Decision.
We are also seeking to develop the Range gas project, a new gas field located among proven CSG fields in the Surat Basin, Queensland with 135 PJ (net to Central) of development-pending 2C contingent resource.
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