Yolla writedown flagged

The BassGas partners have flagged a potentially dramatic $300 million reduction in the estimated value of the gas remaining in the offshore Otway Basin field following preliminary data from the Yolla-5 and Yolla-6 development wells.
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Haydn Black

Reporter

AWE (35%) has moved quickly to say that while the interpretation of log and pressure data on the estimated original gas in place for the field requires further technical work to validate the reduced estimate, it has reduced its estimated share of the remaining Yolla field by 5.5 million barrels of oil equivalent to 13MMboe as a precaution.

"After the recently announced 19.3MMboe increase in 2P reserves in the company's Sugarloaf project, the Yolla reduction represents 5% of the company's total remaining 2P Reserves of approximately 100MMboe," the company said.

The real pain will be felt on AWE's bottom-line, with AWE estimating it will writedown the value of the asset by between $100 million to $110 million after tax in its full year accounts.

"The updated reserves at Yolla will result in less gas production later in the field life, but overall it is not expected to have a material impact on production or cash flow during the next three to four years," AWE managing director Bruce Clement said.

"We anticipate production from the field will increase to a rate close to the facilities' capacity of 67 terajoules per day, once the Yolla-5 and Yolla-6 development wells are brought on-stream.

"AWE will now consider accelerating development feasibility studies for the Trefoil field in adjacent permit T/18P to determine if its 2C contingent resources of 17MMboe (net) can be developed earlier as an incremental project to Yolla production," he said.

Origin operates BassGas (42.50%) and T/18P (39%) for AWE, Toyota Tsusho Gas and Prize Petroleum International.

AWE owns 40% of the surrounding permit.

The BassGas project consists of the Yolla offshore well head platform connected by pipeline to the gas processing facility at Lang Lang, Victoria.

The Yolla platform is located in Bass Strait, about 140km offshore from Kilcunda, Victoria.

Clement said AWE would continue progressing its major development projects, particularly the appraisal drilling and early development of the Waitsia gas project in Western Australia.

Drilling at Waitsia-2 is continuing with core being cut from the Kingia Sandstone.

The well is at a depth of 3152m, with a planned total depth of 3803m.

If the results are positive, AWE may undertake a flow test of the Waitsia-2 well and the well may be completed as a production well for a potential future field development.

AWE and Origin are 50:50 partners in Waitsia, which has an estimated 290Bcf resource in the Kingia/High Cliff Sandstone formations.

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