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ESG currently holds 100% of the PEL238 licence, which contains the soon to be developed Coonarah Gas Field, however the CBM rights were previously assigned under a strata title arrangement to Gastar.
The acquisition of the full 65% interest involves a staged combination of work program and cash payments totalling about $12 million, with additional payments due if substantial production thresholds are met.
Gastar has undertaken extensive CBM exploration and appraisal work over the last five years, and in 2000 reported "Netherland Sewell & Associates estimated that possible reserves net to Gastar's interests are about 2.9 trillion cubic feet".
At that time Gastar had a 42.5% interest in the CBM rights in PEL 238, so the estimated possible reserves for a 100% interest is 6.8 TCF (and for a 65% interest 4.4 TCF).
ESG says the factors that set PEL 238 CBM apart from other Australian CBM projects include the existence of two sets of coal measures and the large thickness of coal within both these formations.
The two Permian age coal deposits overlying each other in PEL 238, the Early Permian Maules Creek Formation and the Late Permian Black Jack Formation, are developed over most of the 9,000sqkm licence area. In addition, the main coal seam in each formation attains a thickness of 15m, with other significant coal seams in both formations ranging in thickness from 3-6m.
To date, the CBM exploration and appraisal work has concentrated on the Early Permian Maules Creek coal measures and this work has demonstrated that the coals are thick, fully gas saturated, highly permeable, slightly over-pressured and they respond well to fracture stimulation.
The next phase of appraisal and development activity will involve completion of the 5 spot development pilot within the Bohena Gas Field and the drilling and production testing of a horizontal well.
The proposed work program is to be completed over a three year period. The company is entering into discussions with potential joint venture and/or equity participants to determine its ultimate level of participation in this opportunity.
