Central Petroleum (ASX: CTP) holds an extensive package of prospective acreage of over 270,000 km2 in central Australia, which is predominately in the Pedirka Basin, along with 25,000 km2 in the Southern Georgina Basin.
Apart from conventional gas potential, the company has had independent estimates of over 10,000 trillion cubic feet in UCG "syngas" prospective recoverable resources.
Central Petroleum (ASX: CTP) has relinquished its 3 geothermal exploration permits in order to focus on its core petroleum exploration activities in the Amadeus and Pedirka basins.
The company said that keeping the permits would have required spending A$11 million over 4 years, including A$7 million in the first 2 years on its geothermal commitments.
It added it would rather use its funds to follow up on the Surprise oil discovery in the Amadeus.
Dalton Hallgren, Central’s acting chief executive, said the relinquishment of the geothermal permits allowed the company to focus on the assets that are expected to deliver the best return on investment.
“From both a financial and management perspective, the expenditure required to advance these geothermal assets was not considered in the best interests of the Company and its shareholders.”
Attempts to find both farm-in partners and buyers for the permits had not resulted in any interest.
The Surprise-1 discovery has paved the way for Central to enjoy early oil production and cash flow.
Extended production testing is expected to start soon – and run for between 6 to 12 months, while the potential drilling of an appraisal well on the discovery are also on track with the company confirming that it had settled a A$11 million share placement.
Besides delivering early cash flow, the testing will allow Central to fully clean up the well, demonstrate its sustained flow capability and determine the best flow rate without damaging the formation.
Surprise oil discovery
The Surprise-1 horizontal well flowed light sweet crude at a maximum sustained rate of 380 barrels per day (bpd) with low water cut, marking the first major onshore oil flow in the Northern Territory in nearly 50 years.
It has served to validate Central's long-standing belief in the petroleum prospectivity of central Australia and upgrades the commercial oil potential of its large Western Amadeus Basin acreage.
At sustained production rates of about 300bpd, Surprise-1 could generate revenue of US$1.16 million (A$1.12 million) per month at current Tapis spot oil prices of about US$129 per barrel.
Further appraisal of the discovery would allow Central to delineate its extant and determine its productivity and resources present, which RPS Energy had previously placed at between 0.5 and 2 million barrels of in-place oil.
This includes 3D and 2D seismic over the Surprise field and possibly the drilling of a follow-up well, which would allow the company to more accurately assess the find and double production and cash flow.
Further upside likely if its investigation into the unconventional shale oil and gas potential of the Horn Valley Siltstone bears fruit.
To top it off, the company has also signed up former Queensland Gas Company boss Richard Cottee as its chief executive officer and a director elect.
Cottee had joined QGC in 2002 and had guided the company, which had floated at A$0.20 in 2000, to its eventual acquisition by BG for A$5.75 per share, or A$5.7 billion.
He is expected to focus on farm-out agreements that will fast track development, unlocking the value of the company’s large landholding.
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