AUSTRALIA needs cheaper oil, and a cast of smaller companies has put reputations on the line this summer in the search for new fields in the offshore Perth Basin near Dongara.
Following a trio of successive dry wildcat wells in three structures in the past month, a few egos have been bruised and some investor hopes dashed, but the story is not over.
This summer’s activity has implications for merger and acquisition activity and regional acreage releases for which applications close within two months.
However keen the disappointment this week on an absence of black gold in Vindara 1, the companies are not discouraged, Voyager Energy managing director John Begg said.
Voyager Energy, a young WA company that listed 18 months ago, has been a partner in all the offshore action.
“We’re disappointed, but not discouraged,” Mr Begg said.
“It would have been fabulous, but this is the typical pattern of exploration drilling and the nature of the business we‘re in.”
He said Voyager mapped out a success case last year, which included Jingemia and Cliff Head, both of which will now be producing fields.
“These two paint a solid future for the company, and everything else was considered a bonus at this stage,” Mr Begg said.
“It is disappointing, though, after such high hopes.”
Investors have mauled the wildcat explorers, but the next well – a further appraisal well for Cliff Head – and an anticipated announcement of field development, is likely to reignite some of the former market.
Despite the initial failures with Mentelle, Twin Lions and now Vindara, merger and acquisition activity remains a valid proposition following the summer program.
“Prices are now not as high as they would have been, and people will be looking at the pieces of the action they have,” Mr Begg said.
Once the reserves at Cliff Head are better known, and the potential of the whole trend, the calculators will be out, determining the value of Cliff Head holdings.
Voyager has been considered a target, but is not keen to relinquish territory. The company has one of the largest holdings in the northern Perth Basin and intends to be part of expected drilling within three offshore blocks further north of this summer’s activity next year.
In the meantime, there is plenty to be done.
Voyager will be drilling onshore near Dongara by mid-year or thereabouts, this time a few kilometres inland on Jingemia.
This new field could deliver Voyager net revenue of up to $3 million in 2004.
In the meantime an application for a production licence for Cliff Head will go in, with a view to offshore production by 2005.
More land and airborne gravity data, and 3D seismic will be gathered on the structures offshore and onshore near Dongara, on which joint venture forward planning will be determined.
Mr Begg would not comment on likely applicants for more regional acreage under release from the WA Government, in two rounds this year.
Applications close in April, for the first round of releases, including six northern Perth Basin blocks.
Some companies may now be put off following this summer’s activity, Mr Begg said, while others would see it as an improved opportunity to compete for holdings.
Activity like that conducted in the offshore Peth Basin this summer was increasingly important for Australia, Australian Petroleum Production and Exploration executive director Barry Jones said in Perth last week.
“Australia is running out of cheaply produced oil,” he said.
“While governments think of the industry as big business, the success of this industry is found in small business.
“It’s the old adage – save the pennies and the pounds will look after themselves.”
p The writer recently visited drilling sites near Dongara as a guest of Voyager Energy.
