“We anticipate that by end-2007, Drillsearch’s production volumes will have doubled to around 300,000 barrels per annum,” he said.
“If oil maintains its level of $US60, group revenues in 2007 should increase to around $A24 million with net operating revenue of around $A15 million.”
Discussing the Santos-led Cooper Oil Project, Armstrong said the partners had started a “third round” 22-well delineation and development drilling campaign in the Endeavour field in the northeast corner of the Tintaburra Block. Endeavour 21, the first well in this round, has been cased as a new oil producer.
“This field has been very significantly extended by a number of step-out wells and development drilling will continue until at least March 2007,” he said.
“The rest of the Cooper Oil Project in the Tintaburra Block will continue through 2007 and Drillsearch expects to participate in around 80 wells in the block, including the 22 Endeavour wells, although the program may vary depending on results.”
The Cooper Oil Project, unveiled late last year, involves using new generation small, light automated rigs drilling about 1000 small wells to target small, shallow pools of oil still in place in the mature fields of the Cooper Basin.
Santos is using its huge database to prioritise drilling in regions with potential for higher recovery rates, milking more liquids out of existing fields.
Santos believes it could get up to another 50 million barrels (MMbbl) of oil in this way. By late August, the company had drilled 42 wells with 37 successes – an 88% strike rate.
Armstrong told the Drillsearch AGM that the junior was close to finalising a formal farm-in agreement with Santos on the Chandos Block, located 25km north of the Tintaburra Block. Santos will undertake a 3D seismic survey and will have options to earn a 60% interest by drilling two wells.
Drillsearch also holds offshore Bonaparte Basin acreage on the Northern Territory/Western Australia border.
Armstrong said the company had committed to drill two Bonaparte wells in late 2007. One would test the Marina Prospect, which could have up to 230MMbbl of oil. A second well would further appraise the Turtle/Barnett leases where there could be 90MMbbl of oil-in-place.
“A number of highly experienced oil industry participants are now expressing interest in participating in this drilling campaign and advanced discussions are underway with a substantial USA-based company with regard to the farm-out of both Turtle/Barnett and the Marina Prospect,” Armstrong said.
“These arrangements, when completed, will allow us to retain significant interests in each of these properties.”