Wellington-headquartered Austral this morning said three of the four Cheal development wells drilled during November-December from the northern B wellsite, within petroleum mining permit PMP 38156, had been successfully completed and perforated.

Production testing of the first well, Cheal-B3, started late last Friday. Over the first four days, the well produced a total of 1972 barrels of 38 API oil and 1.24 million cubic feet of gas, with no water, at an average rate of 493 barrels of oil per day (bopd) and 310,000 cubic feet per day of gas.

The well, which was flowing naturally without artificial lift, was choked back to maintain a flow rate of about 500bopd. Testing of two other B site wells is due to start later this month.

The fourth well, Cheal-B4, would be sidetracked and was expected to be completed as a development well at a later date, following a further review and interpretation of seismic data in that area, said Austral.

Cheal-B4 was drilled late last year as an exploration well to test sands to the northwest of the Cheal field’s bounding fault.

It successfully confirmed the presence of hydrocarbons beyond the then-defined limits of the field, with company chief executive Rick Webber saying Cheal-B4 increased the partners’ confidence in the resource potential of that northwest extension.

Webber today said construction of the Cheal production facilities continued at the Cheal A wellsite and progress remained on schedule.

Front-end engineering and design on the pipelines connecting the A and B wellsites had been completed and reviewed and detailed design was now underway. All three 2000bbl tanks and both 400bbl tanks had been installed.

Arrangements to secure the long-term sale of both oil and gas were under negotiation.

Webber added that the Ratanui-1 exploration well in onshore Taranaki licence PEP 38741 was expected to spud today. The well, located east of the town of Inglewood, would be targeting the Miocene-aged Urenui and Mount Messenger sands encountered at the more southerly Cheal field.

Drilling to a total depth of 2120m was expected to take about two weeks, with the estimated well cost, on a dry hole basis, being $US1.54 million ($A1.2 million).

Meanwhile, Webber said that last year’s 2D seismic shot in Papua New Guinea licence PPL 235 had been processed and interpreted.

The data identified and confirmed drilling locations on the northern sector of the possibly commercial Douglas gas-condensate structure. It had also identified the nearby Puk Puk prospect as being a valid exploration drilling target.

Further specialised seismic processing would be conducted to determine if the data could be used to predict the presence of hydrocarbons at reservoir level elsewhere on Douglas and in the Puk Puk prospect – as was the case with the Douglas-1 discovery well.

Last month, London-based operator Rift Oil said an Upstream Petroleum field development study had identified several potentially economically viable development options.

Today Webber said the joint venture was actively pursuing two options – one of which involved a major longer term user and a second that would exploit gas through power cogeneration on a smaller scale but with more immediate prospects of commercialisation.

Rift Oil operates PPL 235 and holds a 65% stake in the licence, while Austral holds 35%.

The PMP 38156 (Cheal) partners are operator Austral (69.5%) and TAG Oil (30.5%).

The PEP 38741 (Ratanui) partners are operator Austral (55%) and TAG (45%).