WHL Energy Ltd (ASX: WHN) is an emerging oil and gas exploration company focussed on the East African region. The company's "flagship" asset is a large petroleum exploration acreage position, held at 100% equity, off the southern coast of the Republic of the Seychelles.
WHL Energy’s (ASX: WHN) newly awarded La Bella gas field in Otway Basin could add further value in the near future with strong industry interest and the expected growth in eastern Australia gas demand coming together to attract farm-in partners.
While WHL has said that its priority is on finalising a partnership in its Seychelles and capturing further African portfolio growth, a partner in VIC/P67 could drive exploration and a quick development through existing infrastructure in the area.
The company said the La Bella gas field within the permit could have a conservative net present value of A$75 million at current gas prices of A$6 per gigajoule.
This value could more than double to over A$140 million if gas prices increase to A$8 per gigajoule.
WHL said recent public briefings by companies such as Santos (ASX: STO), Origin Energy (ASX:ORG) and Beach Energy (ASX: BPT) had flagged an expected increase in east coast gas demand that could see prices increase to between A$6 to A$9 per gigajoule as gas contracts become increasingly linked to oil prices.
“Importantly, the deal by Origin to supply gas to Santos was agreed at oil linked prices confirming the Company’s view that gas pricing for firm-supply delivered around 2016 will be significantly higher than current levels,” WHL managing director Steve Noske said.
“Oil-linked gas prices would cost the buyer around $7 a gigajoule when international oil prices were at US$100 a barrel.
“The industry and WHL Energy is in agreement that gas pricing will increase. With East coast gas deals now being completed at oil linked pricing we have confidence that we can realise the significant value in our VIC/P67 acreage that includes La Bella, a ready to develop gas field.”
While La Bella allows WHL to book an immediate best estimate contingent resource of 158 petajoules (149 billion cubic feet) of gas and 1.2 million barrels (MMbbl) of condensate, other prospects in the permit hold prospective resources of 668 petajoules of gas and 4.9 million barrels of condensate.
These include the relatively low risk prospects present at Highlander and West La Bella which provide additional tie-back opportunities to a potential La Bella development.
VIC/P67 is located close to existing infrastructure including the Santos operated Casino gas development, Origin's Otway gas project, the BHP Billiton (ASX: BHP) operated Minerva development and TRU Energy’s Iona gas plant.
WHL had committed to a A$62.1 million primary work program to secure the permit.
This includes the reprocessing of 1000 kilometres of 2D seismic, acquiring and processing of 811 square kilometres of 3D seismic as well as 650 kilometres of 2D seismic, 2 exploration wells and geotechnical studies.
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