24/04/2019 - 09:52

Juniors pumped over Perth Basin potential

24/04/2019 - 09:52

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After a prolonged intermission, oil and gas activity in the Perth Basin appears to be picking up.

Juniors pumped over Perth Basin potential
Dennis Donald (left) and David Casey say drilling will be under way at Warrego’s West Erregulla project in weeks. Photo: Gabriel Oliveira

An encouraging oil price and reduced cost pressures are among the reasons the team at Warrego Energy remains upbeat about the potential of Perth Basin.

The Aberdeen-based company joined the ASX last year after a reverse takeover of Petrel Energy in March.

The company’s main Perth Basin project is West Erregulla, a conventional gas resource.

Warrego sold half of West Erregulla to Adelaide-based Strike Energy in June 2018, with Strike to spend $11 million developing the well as operator.

Strike has brought drilling company Easternwell’s 106 rig, one of the country’s biggest, to the west coast to drill next month.

Warrego chief executive of Australia & Asia Pacific, David Casey, told Business News the recovery of the oil price from deep lows of three years ago had been one cause for optimism.

“What you’ve seen is a rationalisation, you’ve also seen a lot of companies get better at what they do on a day to day basis, particularly here,” Mr Casey said.

“Our costs (in the industry) have come down, because we’ve had to work smarter.”

Warrego group chief executive Dennis Donald said he expected larger oil and gas businesses would be keen to acquire developments after years of reduced expenditure in the industry.

“Because of the massive downturn in the oil and gas industry of the past 3.5 years, the attrition rate among (junior) explorers has been extremely high,” Mr Donald said.

Investors had also shown interest, particularly because the drilling program was in the very near future, he said.

Project operator Strike has estimated West Erregulla has a resource of 1 trillion cubic feet of gas, and Mr Donald was optimistic about the significance of the field.

He said the project would be for domestic gas in the first instance, although he was open to other arrangements.

Activity

Work on the basin’s biggest project, Mitsui-led Waitsia, appears to be continuing, although the Japanese company has been limited in what it will say publicly.

AWE, which Mitsui bought in a takeover last year, launched a front-end engineering and design competition for stage two of Waitsia in June 2017.

Waitsia will be a $100 million project, with Japan-based Mitsui and Adelaide-based Beach Energy holding 50 per cent each.

“The company, with our joint venture partner Beach Energy, is progressing plans in preparation for a final investment decision on the Waitsia project, and the design competition is ongoing,” a spokesperson for Mitsui said.

Mitsui did not put a timeline on when a decision would be made.

In a February ASX announcement, Beach Energy flagged that it had received approvals for 3D seismic surveying at the Trieste field and that it was progressing plans for a well at Beharra Springs Deep.

Beach is expected to drill the Beharra well within two or three months, Business News understands.

West Perth-based Norwest Energy received approval in February for 3D seismic work at the Xanadu prospect, with work expected to get under way in May.

The company had a leadership change in early April, with managing director Shelley Robertson replaced by Iain Smith, who has previously worked in exploration at Woodside Petroleum.

Norwest also secured a $500,000 convertible loan facility with Sundowner International, a related party of director David Kennedy.

Triangle Energy Global holds 30 per cent of Xanadu, and chief executive Robert Towner told Business News the company was embarking on a three- to five-year program developing oil opportunities in the basin to raise utilisation at its Arrowsmith oil stabilisation plant.

“It’s good … there’s certainly a lot more activity in general going on in the basin,” Mr Towner said.

“It’s early days on a lot of this stuff.”

He said the improved oil price gave people confidence, particularly investors.

Triangle also farmed into Key Petroleum’s Mt Horner field in an October deal, with the two companies working to develop a program of work, while Key itself has said it would drill its own exploration well at the nearby Wye Knot project during 2019.

Mineral Resources has interests in the Perth Basin, after it acquired assets from Empire Oil and Gas in November 2017 when that business entered receivership.

MinRes is targeting the Lockyer Deep prospect, and has been considering options for securing a rig in recent months.

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