Santos shares had a good rise yesterday after a better than expected test report from the much anticipated Dorado-3 well being drilled off the Northwest WA coast.
In fact the report suggested the initial flow of oil could be one of the highest ever reported from a well on the Northwest Shelf.
Santos ended up 2% at $7.50 while the shares of partner Carnarvon Petroleum rose more than 5% to 40 cents on the news.
Testing indicates a potential flow of up to 30,000 barrels of oil a day from what is known as the Caley reservoir. There was also a strong flow of gas from the well.
The oil discovery is in Commonwealth waters about 160 kilometres north of Port Hedland in an area in which Santos has an 80% stake (through the Quadrant Energy group which Santos bought in 2018) and Carnarvon holding the remaining 20%.
A big oil and gas find in the Dorado-1 well (one kilometre away from the Dorado-3 well) and Roc South wells in 2018 and earlier this year gave strong indications the area could hold a major deposit of oil, gas and light hydrocarbons.
Carnarvon said in its initial report in July 2018 there could be 170 million barrels of oil in the Dorado strike, but the current well seems to suggest this could be larger, along with solid gas flows.
In the report to the ASX yesterday both companies revealed that the initial clean-up flow test of the Caley reservoir achieved a maximum measured rate of approximately 11,100 barrels of oil a day and 21 million standard cubic feet of associated gas a day.
“The oil rate is one of the highest ever from a North West Shelf appraisal well test,“ both companies said in the statement.
“The test was conducted over an 11-metre net interval between 3,999 and 4,015 metre Measured Depth.
“As with the recent Baxter test, the Caley production was constrained by surface equipment, indicating the reservoir has the capacity to flow at significantly higher rates,” the companies said.
The Baxter test referred to in the release was reported to the ASX last month and revealed that a test of the Baxter reservoir in the Dorado-3 well “achieved a maximum rate of approximately 48 million standard cubic feet per day of gas and 4,500 barrels per day of associated condensate.”
Santos CEO Kevin Gallagher said in the statement on Tuesday that “The results are very encouraging for the development of the shallow-water Dorado field, with the test indicating very high potential flow rates of around 30,000 barrels per day from each single production well in the Caley reservoir. This positive result represents a significant step in progressing Dorado as one of Santos’ most exciting new development projects.”
“The Caley flow test was the second of two for the Dorado field, following the Baxter test late last month which confirmed excellent productivity and fluid quality. Together, these results indicate potential for field production flow rates at the higher end of expectations and strongly support progress towards FEED entry in early 2020,” he said.
