Baraka Energy & Resources (ASX: BKP) has advised that operator Statoil has completed the AMY 2D seismic survey in the Southern Georgina Basin, Northern Territory, and is assessing the data to determine drilling locations for conventional and unconventional wells.
The Norwegian state oil company is one of the most technically advanced oil and gas operators and is expected to be able to overcome technical issues that affected previous drilling programs.
“To the benefit of our shareholders, the latter part of 2013 and 2014 will see increased activity in the Southern Georgina Basin,” Baraka executive chairman Collin Vost said.
“Besides our own activities, neighbouring exploration company Central Petroleum is due to complete its seismic survey in the last quarter of 2013 as per their Southern Georgina Joint Venture with the world’s 13th largest oil and gas company, French energy giant Total.
“Interpretation of their data is expected to be finalised during the first quarter of 2014, followed by a 6 hole drilling programme and testing program during the period April-November 2014.”
Seismic survey
The 385 line kilometre AMY survey will be interpreted to target conventional hydrocarbons in the Cambrian Thorntonia and other formations and unconventional hydrocarbons in the Lower Cambrian Arthur Creek Formation.
This will aid in identifying locations for exploration wells to be drilled as part of the 2013/2014 capital exploration program in the Southern Georgina Basin.
The survey will also fulfil the Northern Territory government work commitments for permit retention, delineate the southern and northwest basin margins and help outline prospective hydrocarbon target areas.
Statoil driving exploration
Statoil took over as operator of EP 103, EP 104, EP 127 and EP 128 as well as the exploration permit applications EPA 213 and EPA 252 under its amended farm-in with PetroFrontier (CVE: PFC) and will spend US$160 million to fully fund exploration over three phases to the end of 2016, in return for 80% of PetroFrontier’s working interest.
This adds to the US$30 million that PetroFrontier and Statoil had jointly spent since the farm-in agreement was reached mid last year and the first half of 2013.
Following completion of the farm-in, Statoil will have a 80% interest in EP 103 and EP 104, 60% in EP 127 and EP 128 (excluding the Elkedra-7 area) and 80% in exploration permit applications EPA 213 and EPA 252.
Under Phase 1 and 2A, Statoil will spend US$50 million throughout the remainder of 2013 and 2014 to fully fund the 385 kilometre AMY seismic program as well as drill and stimulate between four to six vertical test wells.
It can then proceed to Phase 2B, where it can spend US$30 million on exploration before moving on to Phase 3, which will require it spend US$80 million.
Baraka remains responsible for its share of costs in EP 127 and EP 128, where it has a 25% stake.
It also holds a 75% stake it holds in the 75 square kilometre area around the Elkedra-7 well in EP 128.
Conventional exploration
Baraka said in its report for the quarter ended 30 June 2013 that it is continuing efforts obtain consent from PetroFrontier to proceed with exploration on the highly prospective conventional areas of the Hagen Member within EP-127.
It believes that it is now time to seek the necessary additional amendments to the Joint Operating Agreement it requires to pursue this exploration program either on its own or with an appropriate new partner.
The company is hopeful that Statoil will see the benefits of having twin programs running together with their activity on the shale oil/gas areas.
It noted the conventional targets would be within the same Basin and sharing data valuable to both companies and added that Statoil had indicated that it did not see any conflict as its prime objective is the shale oil and gas areas.
Analysis
The completion of seismic starts the momentum going for increased exploration and drilling in the Southern Georgina Basin tenements.
This coupled with a highly capable operator in Statoil all but ensures that prospective targets would be found and that any commercial discoveries would be quickly developed.
Proactive Investors continues to regard the farm-in as being very bullish for Baraka.
Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.