The well will be used to gain more information about the Mutineer reservoir in permit area WA-191P of the Carnarvon basin. A third appraisal well in WA-191P is probable before the end of the year.
Last month, drilling by the joint venture in the permit area proved encouraging with the Norfolk-1 well encountering a 30m oil column while its geological sidetrack, Norfolk-2, intersected a 9m oil column.
The development of Bayu-Undan gas reserves along with other Timor Seas gas reserves remains a high priority for Santos, which also has other interests in the Timor Sea including a 40% interest in Evans Shoal and a 95% interest in Petrel/Tern in the Bonaparte Basin.
One roadblock still standing in the way of developing Bayu-Undan is the endorsement by the Federal Government of the fiscal regime for the project which has been agreed with East Timor. The deal allows East Timor to take 90% of the royalties. A Santos spokesman said this decision should be made in the next "couple of weeks".
A positive decision would mean bringing gas to shore and the building of an LNG production facility. And with a pipeline coming to shore, several other gasfields in the Bonaparte Basin such Tern, Petrel and the Woodside-operated Blacktip could be opened up to development, which would be "all very promising", according to the Santos spokesman.
In other Santos news, its managing director, Mr John Ellice-Flint said, independent oil and gas companies can survive and prosper by playing to their strength, namely greenfield exploration. "Accordingly at Santos we are transforming our exploration from a majority of low-risk, low-reward prospects to a portfolio that is balanced between low, moderate and high risk-high reward prospects," Mr Flint said.
Mr Flint said the company would be looking to leverage its expertise outside of Australia, which is becoming more important as the oil and gas reserves of its "legacy asset" - the Cooper Basin - begins to deplete.
Santos took a big step in this direction with the acquisition of Esenjay Exploration of Texas, giving it exposure to a large portfolio of onshore Gulf of Mexico assets.
Investors have given Santos the thumbs up with its share price moving steadily from $5.60 in early March to its current price of $6.16 per share.
