Yes, Virginia! There is commercial gas at Moonshine

PETSEC Energy's Virginia Geason-1 well in onshore Louisiana has been drilled to a true vertical depth of 3489m and logged 6.4m net of pay, primarily gas, in the target Echols sand. The well has been cased and suspended for future completion.

Because sidewall cores could not be retrieved from the well bore, Petsec will further test the pay interval to determine whether any of the productive interval is oil.

The rig used to drill the well is being disassembled and released to be replaced with a more efficient completion rig that will test the pay zone prior to completing the well.

Virginia Geason-1 was the first to test the well, to test the George Dickel prospect in Petsec's 60,000-acre Moonshine project area in Louisiana's St James Parish.

Petsec is best known for its work in the Gulf of Mexico, but the company is also building an onshore Gulf Coast position.

"It is always much more expensive to put in pipelines and drill wells offshore than it is onshore," Petsec chairman Terry Fern said.

"We think we can find reasonable amounts of gas onshore and when we find it, the net return should be higher than offshore because we do not have to wear the extra infrastructure costs."

The company entered the Moonshine project, its first onshore acreage, in 2004, and went into the Hollywood AVO Trend Project in May last year.

The company's first well at Moonshine discovered a sub-commercial gas accumulation. Seismic logs were run to allow recalibration of 3D seismic response in this area.

Reprocessing of 3D seismic was also undertaken to better define areas of productive rock.

"The move onshore was primarily to protect us against rising offshore costs," Fern said.

"About 60 percent of the Moonshine area is swamp, which is why there has not been any 3D seismic in the past but there has been some production in the surrounding area so there is a network of pipelines that one can access."

In addition, onshore rigs are much cheaper than offshore rigs and there are no platform costs.

But there would no point in Petsec stepping onto dry land if the onshore Gulf Coast was not petrolific.

"Most of the reservoir rock along the Gulf Coast is very good and because the place has been so productive in the past, the infrastructure is extensive and it has become a relatively cheap environment in which to operate," Fern said.

Petsec also has a host of consultant landmen as well as joint venture partners such as Houston Energy, Red Willow Production Company, Badger Oil and Gas, Helis Oil and Gas and Cross Timbers Oil Company.

"It pays to be very careful when choosing your US partners," Fern said.

"You should deal with people who have honesty, integrity, technical capacity and the willingness to establish a long-term relationship.

"And it is important to clarify that their objectives are the same as yours."

Petsec is the operator of the Moonshine Project. It has an 80% working interest in Virginia Geason-1 and a 58.4% net revenue interest.

In the company's other onshore Louisiana project, the Hollywood AVO Trend, the joint venture has drilled two unsuccessful wells.

One found gas but in poor reservoir sands, while the other was abandoned before reaching the proposed total depth of 4147m due to deteriorating hole conditions.

Work continues to determine the remaining prospectivity of the target AVO anomaly to determine whether to sidetrack or abandon the well.