Recently listed oil and condensate producer Aurora Oil & Gas is buying into one of the biggest undrilled onshore gas structures in the US.
Recently listed oil and condensate producer Aurora Oil & Gas is buying into one of the biggest undrilled onshore gas structures in the US.
The cashed-up Perth company will spend $1.3 million to earn a 12.5 per cent stake in the Sugarloaf prospect in Texas, a deep gas play with the potential to host several trillion cubic feet of gas. It will have to pay a further $428,000 to complete the well for production.
The prospect is a world-class exploration play, covering about 80 square kilometres, about the same size and the big producing Moomba gasfield in South Australia.
Operator Texas Crude Energy is expected to begin drilling to 6,400 metres between December and January next year. Drilling is expected to take three months.
Aurora managing director Jon Stewart describes Sugarloaf as “a potential company maker with a really good risk scenario”.
“Our total cost will be somewhere between $1.5 million and $2 million, and if it comes in, the return could to 200 times that,” Mr Stewart told WA Business News.
“Gas prices are historically high and indications are that they are likely to stay that way for an extended period. However, the project is still robust at lower prices.”
The primary target reservoirs are the thick sands of the Hosston Formation.
“Good reservoirs at depth translate to high flow rates,” Mr Stewart said.
It was modern reprocessing of 1970s and 1980s seismic recently that revealed the presence of the major Sugarloaf anticline, not evident from the original processing.
Aurora also has a 12.5 per cent stake in the Flour Bluff gas field, also in Texas, which is producing about six million cubic feet of gas equivalent a day (including some condensate) and increasing as the deeper reservoirs are developed.
Mr Stewart said Sugarloaf was a big upside play on what was now development at Flour Bluff.
Aurora has moved on from life as menswear retailer Tony Barlow Australia in December last year when it acquired its Flour Bluff stake.
A $4.25 million cash raising in February-March this year retired debt and the company relisted as Aurora in April.
The company has 88.8 million shares and 22.5 million options on issue, and its share price has risen from 20 cents at relisting to around 43 cents.
