Nido takes part of find

WEST Perth-based Nido Petroleum Limited – formerly known as SOCDET – has picked up a 40 per cent option in the Zhongyuan

rehabilitation project in Central China which could result in an oil cash flow by mid-2000.

Nido managing director Peter Henderson said the project is a low cost entry into a field which has the potential for excellent economic returns and production.

The company has formed a joint venture with the United State-based Monde Group and will pay US$500,000 to earn its stake in the project to rework an oil field which has been operating for fifteen years.

Mr Henderson said the project could be a very good one for the company which has been pursuing hydrocarbons in the Philippines for some years.

“The money needed to prove up the field is very small for the prize at the end of the day,” he said.

“It is almost self-funding and will cost us a lot less than exploration.”

The Nido-Monde JV has a petroleum contract with one of the Chinese national oil companies, Sinopec, which entitles it to select and manage sections of the already producing Hu and Wen fields, located in Henan Province, onshore China, about 500 kilo-metres south of Beijing.

The project is expected to result in the production of an incremental twenty-three million barrels of oil, or nine million barrels for Nido’s 40 per cent option.

Mr Henderson said the recovery estimates come from work

by Perth-based advisors Resource Investment Strategy Consultants.

Based on RISC’s report, the most likely incremental production is forecast to peak as high as 11,000 barrels of oil per day, with Nido’s share being 4400 bopd.

Under the terms of the contract, Nido and Monde are compensated for the costs of operating the existing wells and share in incremental production from the fields.

The field is covered by a 3D seismic survey that has only

partially been evaluated.

Mr Henderson said there is a potential for under-drilled or undrilled sections of the field that could add additional reserves over and above those estimated from redevelopment efforts.

A technical team is currently working from Nido’s Perth office to review all data.

Mr Henderson said that by the end of the year the company will have more confidence in the project’s potential.

By then it expects to have completed a reassessment of oil recovery and associated costs so that the economic merits of the project can be confirmed.