Flurry of Perth Basin activity with oil discovered, takeover struck and administrators appointed
It has been a hive of activity in the Perth Basin, with a flurry of industry activity over the past week alone to add to a September of mix of good, bad, repetitive and just plain bizarre news.
Firstly, the Labor State Government followed through with its pre-election commitment with a fracking ban in the South-West and a temporary ban on fracking elsewhere across the State, subject to the outcome of yet another inquiry to add to the pile of studies that show the widespread industry practice is safe.
Early rumblings within Government ranks indicate they expect the inquiry to confirm earlier studies and will then allow the industry to get on with it. This is a view that is strongly supported by the Federal Coalition Government as it faces an energy policy crisis on the east coast. The issue of a potential permanent fracking ban has also taken on a new dimension in light of Canberra’s talk of tying access to onshore gas reserves to States’ GST payments.
In better news, following on from the Waitsia gas discovery, which is being lined up as a significant local gas source, three ASX-listed companies and their British partner reported to the market that oil shows had been identified at the Xanadu-1 well, targeting a prospect just south of the Cliff Head offshore oil field.
The four JV partners, Norwest Energy (25% WI), Triangle Energy (30% WI), 3G Group (30% WI) and Whitebark Energy (15% WI), last Monday declared Xanadu-1 as a new oil discovery based on logs run over a 330m section that confirmed reservoir quality sand intervals throughout the Irwin River Coal Measures (IRCM), with porosities ranging from 15% to 16%. Oil was obtained via a testing tool from 4.6m of net pay in the top ‘A’ sand, one of three discrete sand intervals (A, B, C) at top of IRCM.
Analysis of oil samples obtained from Xanadu-1 are expected to substantiate the Cliff Head analogue. Xanadu-1 was drilled from an onshore position, opening up the potential for a low-cost development, with the JV partners now planning a lateral well.
Then on Thursday came news that the Kerry Stokes-backed Beach Petroleum had dealt itself into the Perth Basin following a successful bid to buy Origin Energy’s portfolio of non-core assets, known as Lattice Energy, for $1.59 billion.
Lattice holds half of the Waitsia field, which is operated by AWE, and sells its share of the Perth Basin project’s gas to Alinta. Mr Stokes’ Seven Group Holdings is Beach’s biggest shareholder, and supporting the equity raising associated with the Lattice acquisition.
And that same day the board of Empire Oil & Gas felt it had no choice but to appoint administrators from Ferrier Hodgson after lender Mineral Resources called in a $15.1 million loan. Empire’s pickle stems from an operational disaster that forced the closure of its only producing asset, the Red Gully gas-condensate plant, and effectively left it at the mercy of MinRes. The future of Red Gully, one of only a few Perth Basin production facilities, and Empire’s substantial Perth Basin exploration acreage are now unclear but likely to attract significant industry interest. And not just from MinRes, which sees gas as a new string to its multi-commodity bow.
On the bizarre front, delegates to the Good Oil Conference early last month were treated to not one but two ‘presentations’ by Magnum Gas & Power. Following the playing of a short video interview, the audience was then subjected to a one-man dance review, based on the film Napoleon Dynamite. Truly a WTF moment for all in attendance.
But what do we know? Magnum’s share price doubled following the show…..
