PANCONTINENTAL OIL & GAS NL
makes placement prior to
three well New Zealand exploration drilling program
commencing in mid January 2001.
Pancontinental Oil & Gas NL has arranged to make a placement of 5 million ordinary fully paid shares at an issue price of 5.5 cents to raise $275,000 (before costs) working capital for the forthcoming New Zealand drilling program and ongoing exploration expenses. The shares will be placed with clients of D&D Tolhurst Ltd and New Zealand broker, Forsyth Barr.
The three well New Zealand drilling program will commence in mid January 2001 with the Westech Energy operated Waitaria 2 well, in the vicinity of the city of Gisborne.
This well will be followed by the Huinga 1 (deepened) and the Waingaromia 2 wells later in the first quarter.
The Company announced on 15 November this year that it had expanded its oil and gas exploration interests in the East Coast Basin by farming into the Waitaria prospect. Pancontinental will earn a 7.5% interest in PEP 38335 from Westech Energy New Zealand by contributing 10.0% of the cost to drill the 25 day Waitaria 2 well, scheduled to be spudded in mid January 2001, at an estimated drilling cost of US$1.327 million. Project operator Westech estimates that the potential recoverable reserves of the Waitaria prospect are 88 million barrels oil or 360 billion cubic feet gas.
In the Taranaki Basin, the Swift operated Rimu discovery is of particular interest to Pancontinental as it confirmed the viability of the Tariki sandstone reservoirs as exploration objectives in a permit to the south of PEP38716 in which Pancontinental has a 6.6% interest. In this permit it is planned to deepen the suspended 1999 Huinga 1A well to test the Tariki and deeper reservoirs. Marabella as the operator, and Swift are both parties in the PEP38716 Joint Venture.
The estimated 40 day deepening of the Huinga 1 well is planned for February/March 2001, following the release of the rig by Swift Energy from the Rimu /Kauri appraisal project. The operator, has estimated that Huinga has total potential recoverable reserves of 297 billion cubic feet gas and 17 million barrels condensate in the Tariki and Kapuni sandstone reservoirs.
The Agreement with Westech is consistent with Pancontinental's strategy to invest in areas where commercial discoveries have ready near term access to large potential markets. The development and growth of local industries in the area are restricted by high energy costs. These high energy costs are attributable to the high pipeline tariff costs incurred in transporting Taranaki gas to the region.
Pancontinental is fortunate in having as its Joint Venture partners Westech Energy, Orion New Zealand Ltd and Indo-Pacific Energy (NZ) Ltd. Westech has demonstrated its capabilities as an operator in the East Coast Basin with the Kauhauroa and Awatare gas discoveries and it's ability to manage and operate exploration and drilling operations in this sedimentary basin.
This acquisition will complement Pancontinental's existing East Coast Basin permit PEP38330 in which it has, following the withdrawal of Mosaic Oil, a 38.22% interest. Indo-Pacific and Origin Energy are the other Joint Venture parties.
PEP38330 is adjacent and immediately to the north of the Waitaria PEP 38335 permit, and contains innumerable thermogenic oil and gas seeps that are positive proof of petroleum generation in a grossly under-explored area of the basin.
The current Joint venture is the first to apply modern seismic exploration techniques to this area of the basin, following on from random shallow drilling next to surface oil seeps during the 1870's to early 1900's. One of these 1870's wells, Waigaromia 1, produced oil from shallow reservoirs.
The Waigaromia 2 well will be spudded in March/April 2001, and will be drilled to a depth of 500 meters to evaluate the known shallow, and deeper untested potential oil bearing sandstone reservoirs.
The results from this well will assist in evaluating the extensive play type revealed by the June 2000 Waigaromia seismic survey acquired to determine the subsurface geology and trap style of the historical oil discovery.
The larger Arataha and Pauariki prospects in PEP 38330, which require further seismic control prior to drilling, have potential recoverable reserves of 430 BCF or 264 million barrels and 230 BCF or 208 million barrels respectively, similar in size to the prospects in PEP38335 and PEP38716.
Enquiries:
Andrew Svalbe
Tel: 08 9227 7178
Fax: 08 9227 9079
Email: svalbe@pancon.com.au
