Beach Petroleum will spend more than $10 million over the rest of this year on a new pipeline and new seismic material after yet another successful producing oil well on the Patchawarra West Flank of the Cooper Basin in Central Australia.
The company is getting more out of the Delhi assets it beat Santos to get its hands on in 2006.
Beach says its Parsons-2 well is to be capped as a producer and connected to pipeline infrastructure for first commercial oil flows from May this year.
“Beach is demonstrating the considerable upside yet remaining in the Cooper Basin – Australia’s most prolific onshore petroleum production region – particularly as both the Parsons and Callawonga fields have exhibited high initial flow rates.”, Beach Petroleum’s Managing Director, Mr Reg Nelson said in a statement to the ASX.
“It’s significant that the Parsons and Callawonga fields are the furthest west commercial discoveries to date by any explorer in the Cooper Basin – and the area remains very under-explored,” he said.
"For example, the Callawonga-3 well flowed oil at a rate of 5660 barrels per day during a clean-up flow while the Parsons-1 discovery well similarly flowed oil on clean up at a rate of 3,362 barrels of oil per day. No testing has been done on Parsons-2 as we have sufficient confidence from wireline logging measurements to complete it as a producing well. “
Beach says Parsons-2 (Beach 75% and operator) was drilled to develop the southerly extent of the field discovered by the Parsons-1 discovery well in November last year. The well encountered a 6.5 metre gross oil column in the target Namur sandstones. It is located 1.25km south of Parsons-1, 9km northwest of the Christies field and 8km southwest of the Callawonga oil field.
"Production from the Parsons and Callawonga wells will add significantly to our increasing oil production from the Cooper/Eromanga – particularly now that the new 5000 barrels of oil per day Callawonga pipeline to Moomba has been completed,” Mr Nelson said.
“The Parsons oil field success means that Beach and our joint venture partner, Cooper Energy Limited (25%), have achieved year-on-year discoveries in the unexplored western flank area of the Cooper Basin since our Sellicks field discovery in 2002,” he said.
“The Beach-Cooper Energy joint venture has demonstrated that good operators can achieve high success rates and speedy development of new fields and pipelines – on budget and with low finding and development costs.
“Importantly, Beach is now consistently achieving within our self-operated exploration, appraisal and development footprint throughout the Cooper/Eromanga Basins, a long term finding and development cost averaging around A$15 a barrel.
“With oil this week at nearly US$106 a barrel, the significant margin upside being generated by this focus and success rate, becomes very apparent.”
Mr Nelson said “Beach has now established a larger Cooper/Eromanga footprint than any other company, extending 500 km from east to west, and 300 km from north to south. This is a huge area in global terms and we are involved in many oil projects in the region – not just one so-called Cooper Oil Project."
He says Beach has a 21% interest in the central basin, a 38.5% stake in near field exploration in the prime Naccowlah Block, 100% ownership of the Bodalla Block oil fields on the eastern margin of the basin plus new exploration areas such as the western Patchawarra Flank.
Mr Nelson said that initial estimates are that its various activities in the Cooper/Eromanga in the first half of 2007-2008 oil had effectively added a net entitlement to Beach’s 2P reserves of 3.8 million barrels, building its reserves base of oil for the Cooper/Eromanga alone to nearly 15 million barrels (a 24% increase).
Mr Nelson said “The program to date is well in line with the Company’s predicted 3-5 mmbbl reserves increase per year over the next 3-5 years, with a first half contribution of 1.4 mmbbl in the first half from our Delhi activities with Santos as the joint venture operator adding to 2.4 million barrels that we expect to book from new West Flank drilling.
”Production from the Parsons field will initially be trucked to Callawonga where Beach has just completed construction of a 5000 bopd capacity pipeline connecting to the central basin infrastructure.
"The new pipeline is awaiting final clearance for imminent commissioning. Oil from Parsons and Callawonga will then be routed south via Moomba to the petroleum export port of Port Bonython at the northern end of South Australia’s Spencer Gulf.
“Beach plans to construct a pipeline from Parsons to Callawonga later this year to eliminate the trucking component in an overall development cost of about $6.5 million for the field discovery and connection commitments,” Mr Nelson said.
The Beach-Cooper Energy PEL 92 JV is planning to acquire 195 square kilometres of 3D seismic at a cost of about $3.5 million, to further extend exploration opportunities along the Basin’s western flank. Mr Nelson said, “With production up by 9% for the first half of the financial year and expected to maintain and improve on this upward trend as new production comes on stream, reserves growth of 24% to 15 million barrels, Cooper/Eromanga oil production is becoming one of the most significant and most profitable contributors to Beach’s increasingly profitable operations".
Last month beach reported interim results of net profit after tax of $59 million ($24 million in the previous corresponding period); earnings before interest and tax of $85 million ($55 million);oil-gas revenue $249 million ($214 million) and total revenue $340 million ($262 mill
