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Arc swings it around with Timor Sea well

SHAREHOLDERS in the resurgent oil and gas explorer Arc Energy could be in for yet more good news in the next few weeks.

The company is expected to spud its Sleeper 1 exploration well in permit AC/P 27 in the Timor Sea this weekend and, if the well is successful, ARC is sure to go for a ride.

The company will hold a post-drill stake of 12.5 per cent in Sleeper, which is predicted to hold up to 300 million barrels of oil if hydrocarbons are present.

ARC expects the well to take about 18 days to drill to a total depth of nearly 1600 metres, a task that will be carried out by the Ocean General semi-submersible rig under the operatorship of North American company Anadarko Petroleum.

By drilling the Sleeper 1 well, Anadarko will earn an option to acquire a 75 per cent interest in the permit. If that option is exercised, Anadarko will spend up to another $2 million on further work.

After a disappointing result at its Yardarino-5 well in June last year, ARC turned the corner in October when its 50 per cent-owned (Origin Energy Development 50 per cent and operator) Hovea-1 well hit oil.

This success was followed earlier this month by ROC Oil Ltd’s oil discovery at the Cliff Head-1 well off Dongara, in which ARC has a 7.5 per cent share.

But while there is speculation the oil at Cliff Head is heavier – and thus more expensive to refine – than what is typical in WA, some industry players are suggesting the Hovea field could be much larger than ARC has yet been able to confirm to the market.

ARC managing director Eric Streitberg agreed that this was potentially the case, but said the company had to be conservative about what it could actually confirm, given the market sensitivity of any such information.

“There’s certainly plenty of exploration plays around there and some good-looking prospects, an from that point of view there could well be quite a lot more oil there,” Mr Streitberg said.

“It’s not just a one-shot wonder, and we’ll be getting after it fairly hard.”

ARC has been putting significant effort into finding as much geological information as possible in the area around Hovea, and a second exploration well is scheduled to be drilled there in the next few months.

Before the Hovea discovery, ARC’s share price had fallen below nine cents for the first time in more than a year. But the good news from both Hovea-1 and Cliff Head-1 has pushed the junior explorer above 25 cents, and there are suggestions the stock could continue to rise to 40 cents or more if the good news keeps coming.

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